Economic regulation, safety regulation, social insurance, public services, and torts

To get the benefits of high economic flexibility without the human costs, combine generous provision of public services, a strong social safety net, and tight regulation of conduct that puts health and safety at risk with loose economic regulation and tort reform.

I like Matt Ygelsias’s model of places such as Finland, Iceland, and Denmark as having in effect substituted public provision of essential services and social insurance for economic regulation. If losing your job doesn’t mean losing first your health insurance and then your house, then it becomes morally tolerable and politically feasible to accept policies that put some jobs at risk.

The same is true, in part, of the tort system. If the only way to pay for the treatment an accident victim needs and to replace the income he or she loses is to find a responsible party and make that party pay, then “tort reform” means throwing accident victims on the scrap-heap. But if those problems are covered by social insurance, then the remaining function of the tort system &#8212 deterring risky behavior &#8212 can be handled by regulation instead. American “tort reform” advocates who point to Europe as an example are dishonest insofar as they omit the fact that Europe has a better social safety net and tighter safety regulations to go along with its weak tort system.

So the right formula is a little bit more complicated than “strong safety net, good public services, and loose regulation.” It’s more like “strong safety net, good public services, tight safety regulation, loose economic regulation, and less money moving through the tort system.”

Matt is right to wonder whether the U.S. could ever get there. But it would be a nice place to live.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: