Economic Costs and Government Intervention

I found the president's speech inspiring, and even though the response by the Governor of Louisiana was, to put it lightly, lackluster, it did make me wonder if government oversight of business has been used as a prop to make businesses too big.



Case in point, The Associated Press reported that the absence of Food and Drug Administration inspections at a plant that manufactures medical syringes resulted in the shipment of several that were contaminated. [1]

The Bush administration drastically reduced the F.D.A.'s effectiveness over the last few years, through deregulation, de-budgeting, or replacing people. The absence of inspectors may have uncovered serious flaws in production processes that may have been previously mitigated by the FDA's requirement that the company divert resources toward asset maintenance and cleanliness.

Now, without an effective FDA, do we see the true results of the Production Possibility Curve (PPC)? If the F.D.A. was removed entirely, we would surely once again see Karl Rove on a speaking tour talking about Tort Reform (reforming the legal system because of "out of control litigation.")

Without the FDA, companies that have maximized their production capacity at the expense of health and safety will face far more economic costs.

[1] http://www.google.com/hostednews/ap/article/ALeqM5j20sqsItq7UMZKLJ6MUW0PlTNOGAD96ISUE01