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The Market Regulates Better Than Government, Example: Underwriters Laboratories

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May 10, 2009 – Comments (8)

I derived a special joy in reading this Mises Institute article on Underwriters Laboratories.  You see, I'm from the Northbrook, IL area and my first private sector salaried job was at this very UL office.  Since then, I've worked many years with the government before returing to the private sector.  I've seen the difference in quality, efficiency and attention to detail from both sectors first hand.  This is why I find the idea that government can regulate the markets better than private firms laughable. 

UL has been in business since 1894, and last year alone tested nearly 80,000 products!  They have led, not followed, the government in efforts to increase flight safety, fire safety, and a host of other initiatives to protect the consumer.  UL is not perfect but far superior to government regulators. In its 105 years of existence it has made some mistakes, but I would enjoy seeing any to paint UL's record as inferior to that of the government's.  Now that would be amusing.

Why aren't there more companies like UL?  There would be, if the government allowed it.  UL beat the government to the regulation game, certifying products long before government cared.  As the our economy grew, the government, under the guise of Progressive reform, abrogated competition in market regulation.  Many entrepreneurs are capable of competing with UL to satisfy the consumer's desire for safe products, but no entrepreneur can compete with UL and the government.  So you're stick with what you've got.  Instead of a vibrant, dynamic, and efficient regulatory industry we have UL and a collection of far more expensive, corrupt, wasteful, heavy-handed government regulators.

Sadly, many Progressives want to see UL abolished.  Remember when I was telling you about Woods' Law?  Here it is again:

Whenever the private sector introduces an innovation that makes the poor better off than they would have been without it, or that offers benefits or terms that no one else is prepared to offer them, someone—in the name of helping the poor—will call for curbing or abolishing it. - Thomas E. Woods Jr.

David in Qatar

8 Comments – Post Your Own

#1) On May 10, 2009 at 9:40 AM, DaretothREdux (39.87) wrote:

Gotta love Woods Law! Sadly ironic and painfully true.

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#2) On May 10, 2009 at 10:28 AM, devoish (98.62) wrote:

I have learned that whenever the Mises institute is the source of information, one should question whether there is any truth in  what is reported, and especially whether or not there are details that the reader is depended upon not to know in order to make the argument in favor of abolishing the United States of America.

From this Mises article; But for bureaucrats and left-wing ideologues, no private solution is praiseworthy. The Times' Barry Meier writes that the Lab is "sparring with Federal officials in a behind-the-scenes battle" that is "exposing some potential shortcomings of industry self-regulation." The hope of those who oppose the twister cap is that the government will refuse to approve it for use. People will have to use old aluminum wires or the old, unsafe cap. In either case, the fire hazard will remain higher.

And yet such a product does exist. You can go, today, to purchase electrical outlets, and connectors, approved for use with aluminum wiring. Perhaps ANSI and the Fire Marshals insisted upon a better standard for "twist caps" than the one industry wanted. Perhaps Gov't understood that the inherent design of "twist caps" did not incorporate enough insulation and insisted upon better. Perhaps the material used within the "twist caps" did not solve the problems of oxidation.

Perhaps by "sparring" something like this story is meant? Maybe the Mises Institute is incorrect in its assesment that UL standards are adequate?

 The hope of those who oppose the twister cap is that the government will refuse to approve it for use.

Perhaps those who oppose the "twister caps" are not "left wing ideologues". Perhaps the are the Fire Marshalls who remove the charred remains of a familys loved ones from the ashes of a fire. Perhaps they are the Fire Marshalls who stand helpless in the face of a Mothers screams at the loss of her child.

Perhaps you are really kept safe through your involvement in a Government strong enough to insist that quality and safety is judged more important than profit opportunity.

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#3) On May 10, 2009 at 11:02 AM, UltraContrarian (31.24) wrote:

"But the Lab isn't an arm of the government. It is privately owned, financed, and operated. No one is compelled by force of law to use its services."

"Why aren't there more companies like UL?  There would be, if the government allowed it."

In building construction, fire resistance ratings for assemblies (i.e. walls, roofs, floor/ceiling) are required by the building code. UL, Warnock Hersey, and Factory Mutual are several companies which test fire resistance ratings according to ASTM national standards.  So in this case both statements are wrong: the service is government compelled and there is competition.

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#4) On May 10, 2009 at 11:08 AM, whereaminow (20.03) wrote:

Perhaps you must depend on appeals to emotion to win your case.

You didn't even read what you just posted. That's a hit piece arguing that UL is a tool of private industry because "gasp" UL's customers are private industries that pay for UL's services.  Oh my gosh! How do they live with themselves?

UL has had standards that have failed in its 105 years of business, failures that would have led to lost customers to rivals (if rivals were allowed to enter the market - see government's de facto monopoly on regulation) but never mind the over 1,000 safety standards they have developed on their own.  

The government cares about the individual. Are you serious? 

Do you want me to show you how much your beloved government cares about the individual?

Are you sure you want to do this?

David in Qatar

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#5) On May 10, 2009 at 12:11 PM, UltraContrarian (31.24) wrote:

Also the barriers to successful entry into fire resistance rating are extremely high.  Why would an architect buy a book of XXX Corporation fire resistance ratings when he already has 2000 pages of UL fire resistance ratings?  Why would a manufacturer submit their product to be tested by XXX and not by UL?  UL's market share is not just a product of interaction with government.

In terms of safety and liability, as an architect I can't depend on a private company as much as I can on code officials. Both of those groups of people care a lot about safety, that is not the issue at all.

Finally the efficiency of building code regulation has improved a lot in the last few years.  There used to be a hodgepodge of different codes, but now most states have adopted the current IBC with few amendments, making it easy for professionals to standardize and work across state lines.

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#6) On May 10, 2009 at 5:08 PM, devoish (98.62) wrote:

The government cares about the individual. Are you serious? 

If I cannot meet the individual, I trust elected Government before Mises or you. Hands down, no question.

Do you want me to show you how much your beloved government cares about the individual?

Are you sure you want to do this?

I asked you where has small Gov't succeeded. You gave me Qatar, and it is not small Government.

How would you know if you were incorrect?

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#7) On May 10, 2009 at 8:04 PM, devoish (98.62) wrote:

You didn't even read what you just posted. That's a hit piece arguing that UL is a tool of private industry because "gasp" UL's customers are private industries that pay for UL's services.  Oh my gosh! How do they live with themselves?

Is it a hit piece? Or is it reasonable men, viewing the evidence of failed parts and arguing that UL needs tighter regulations and more Government intervention to hold their customers to higher standards?

I say it is reasonable men, viewing the evidence that they see.

You told us to believe UL had no competition and you based your opinion on that "fact". Yet we have someone who named two additional competitors.

You wish to tell me it is left wing ideologues who cannot see what is. I say you are a silver penned salesman, with a flawed product.

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#8) On May 12, 2009 at 1:57 PM, nzsvz9 (< 20) wrote:

How would UL's record fare against the FDA?

http://www.fdareview.org/incentives.shtml

Sure, it's apples and oranges, but one is private (but not operating in a free market) and the other is government.

How's the record? I'd love to know.

Known by the FDA as patient trial # nzsvz9

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