THE LAST MILE 2

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You probably remember a few weeks back there was a terrible tragedy where a woman literally fell out of a roller coaster and died. Remember? At Six Flags Over Texas. What’s worse, it seemed, that this might have been partly due to negligence on the part of the theme park employee who shrugged off the woman’s concerns that she was not safe and snug underneath the restraint. Undoubtedly there is going to be a big lawsuit about that incident.

That’s not the interesting part. The interesting part is what happened afterward, when Senator Ed Markey, from Massachusetts, started calling for federal regulation of amusement park rides. He observed that a baby stroller is more highly regulated than a roller coaster that goes 100 miles per hour.

That may or may not be true, since amusement park rides are regulated at the state level, and regulations vary from state to state. For example, in Texas, an annual inspection is required, among other things.

Well, naturally we want to prevent adverse outcomes from happening, but as we discussed before in The Last Mile, do we necessarily need to prevent all adverse outcomes from happening? Another way to ask that question is: is there an acceptable level of deaths on amusement park rides? Or should we try and prevent them all?

According to some statistics I read, if you strap into a roller coaster you have a 1 in 750 million chance of taking a dirtnap. Those are pretty long odds, and we have to ask ourselves whether setting up a multibillion dollar regulatory bureaucracy to save maybe one life every three years, does the benefit outweigh the cost?

That is an interesting question indeed. What is the value of a human life? That is really what it boils down to, you see, when you talk about safety regulations. If you spend $2 billion a year for 3 years for a total of $6 billion to save one life, is a human life logically worth $6 billion? Can you put a price on life? Do you want to put a price on life?

I don’t know whether the technocrats have these internal debates at the Federal level, but they should (forgetting momentarily whether regulation actually does prevent fatalities or only succeeds in creating moral hazard, but that is a subject for another post). Regardless of what Washington thinks, money is not infinite, and must be rationed, even by the regulatory state. I don’t know whether the bureaucracy ever successfully did ration scarce resources, but they don’t anymore--they are only satisfied with the 100% solution.

Well, you can have the 100% solution, maybe, but at ten or even one hundred times the price. I think a better system, though, is when we allow some adverse outcomes to happen and then let the tort system deal with it. We have a pretty fancy legal system in this country, and everyone knows that the survivors of this terrible accident are going to be handsomely compensated, and we also know that money doesn’t make the grief that the family members are experiencing go away, and will not bring their loved ones back, but it does help, otherwise we wouldn’t go through with this exercise. Civil judgments, like fines, penalties, and forfeitures, serve many purposes, compensation being one of them, but also, they are a deterrent to future misconduct, by Six Flags, or anyone else.

Funny, though, because if you are in the roller coaster industry, people dying on your rides tends to be bad for business. People aren’t going to want to go on the ride, and they won’t want to go to your park. If an amusement park suffers a series of accidents and mishaps, the only people left who will be going there are the yahoos; everyone else will go to the beach instead. Six Flags has a pretty strong interest in making sure that its rides are safe, even more than making sure they are fun. This is a long-winded say of saying that the free market does a pretty good job of preventing roller coaster fatalities on its own.

One thing I’ve never understood about the argument for regulation is that it is all based on the assumption that the world is full of fly-by-night operators who act unethically to make a quick killing and then fly to the Cayman Islands to live out the rest of their days. Is that true? Absent any level of state regulation, would a fly-by-night amusement park company build a bunch of crappy deathtrap rides so they could sell a few days worth of tickets and fly to the Cayman Islands to live out the rest of their days?

Maybe not, but my wife tells me about her trips to Kenya, and the fact that a huge percent of the medication there (especially malaria vaccinations) are fake. Kenya is apparently full of fly-by-night operators, really savage ones who will sell fake lifesaving medication (with fatal results), and they do it pretty much without fear of retribution, because law enforcement is too weak or ineffectual to do anything about it, or has other priorities. Things are different there.

So does Kenya need an FDA? Probably, at least a rudimentary one. Does the United States need an FDA? I don’t know. Some people have made the case that we have an overactive medical bureaucracy and that we do a pretty good job of denying sick people access to treatments which might otherwise cure them. There is such a thing as medical tourism, and it is a growing industry, for a reason.

Thousands of PhD theses have been written on this subject and we are certainly not going to settle the argument in a thousand words. I observe that businesses who kill people generally don’t stay in business for very long, and by making it too expensive for business to kill people, you also make it too expensive for them to help people. What struck me about the roller coaster incident was that it carried the “last mile” concept to the point of utter absurdity: one person dies and and a lawmaker proclaims that we must create an entire regulatory bureaucracy from scratch, employing thousands of people, spending billions of dollars--and people just kind of nodded their heads in agreement.

Well, if there is one thing we have learned about regulation, it’s that it benefits scale players, so Six Flags won’t have any competitors any time soon. But beyond that, it also creates moral hazard, hey, I’ll just get right on this government-approved roller coaster without doing any due diligence of my own. Sound familiar? Hey, I’ll just drop a hundred grand in this FDIC insured bank without doing any due diligence of my own. When it’s your money, or your life, you cover all your bases. This is why I have no sympathy for the people that download MacKeeper or PCMatic instead of Norton or McAfee.