Sunday, 19 December 2010

Regulations versus Law, or alternatively Arse-covering versus Responsibility

I heard something on the news yesterday regarding the recent environmental disaster in Hungary. Apparently the company is disputing their liability for the cost of the clean-up, on the grounds that they had followed all the regulations. Therefore, it wasn't their fault, the blame, they say, lies with the regulators, or else with those that wrote the regulations.

It seems to me a good example of the flaws in the regulatory principle. We do not need regulations, what we need are clear, generally-applicable laws. Regulations encourage people to focus not on the end, but the means. It makes everyone an arse-coverer. The goal becomes not preventing the bad thing happening, but rather ensuring that if and when the bad thing happens, you can't be blamed; you followed the regulations.

A simple example can be seen in speed limits. The end is that people drive safely. The speed limit is the supposed means, but any driver knows that obeying the speed limit does not in any way guarantee that you are driving at a speed that is appropriate to the road conditions.

Other examples abound, such as in the area of child protection. The end is to ensure that no dangerous kiddie-fiddlers get the job of school caretaker. If that happens, everyone scrambles to check that regulations were followed, and if so, phew, someone else is to blame.

In the case of environmental disasters, the establishment voices chime in about how the polluter should pay, as if this is a new concept. At Euractiv I learn: "Successive man-made disasters have seen the EU adopt rules to enforce the 'polluter pays principle' on companies responsible for major environmental damage." What this illustrates is how far we have been taken from simple, generally-applicable laws, for it was always axiomatic that were there had been harm to someone's property, whether by negligence or malice, the guilty party was to make good this harm.

In an essay entitled 'Conservation in the free market', in which he argues (as ever!) that whatever the question, in this case conservation and environmental protection, the answer is found in private property rights, Murray Rothbard states:
[F]rom the beginnings of modern air pollution, the courts made a conscious decision not to protect, for example, the orchards of farmers from the smoke of nearby factories or locomotives. They said, in effect, to the farmers: yes, your private property is being invaded by this smoke, but we hold that “public policy” is more important than private property, and public policy holds factories and locomotives to be good things. These goods were allowed to override the defense of property rights resulting in pollution disaster. The remedy is both “radical” and crystal clear, and it has nothing to do with multi-billion dollar palliative programs at the expense of the taxpayers which do not even meet the real issue. The remedy is simply to enjoin anyone from injecting pollutants into the air, and thereby invading the rights of persons and property. Period. The argument that such an injunction prohibition would add to the cost of industrial production is as reprehensible as the pre-Civil War argument that the abolition of slavery would add to the costs of growing cotton, and therefore, should not take place. For this means that the polluters are able to impose the high costs of pollution upon those whose property rights they are allowed to invade with impunity.
Whether the company involved in the Hungarian disaster can wriggle out of responsibility remains to be seen. They should not be able to, and would not be able to, if the law was clear and general.


Angry Exile said...

"... but any driver knows that obeying the speed limit does not in any way guarantee that you are driving at a speed that is appropriate to the road conditions.

I'm not sure this is generally recognised by drivers anymore, and possibly not even all the police. The anti-speeding message has been overdone to the point that many think that obeying the regulation is what they need to do to drive safely. If that were true then logically raising all speed limits to a level that no road car could attain would ensure 100% compliance and complete road safety. Clearly that's mad but it demonstrates that rather more than simple compliance to a regulation is needed in reality, which is your point of course.

Trooper Thompson said...


I think you're right (to paraphrase) that people are losing their common sense understanding with regard to this matter. That's to be expected, I suppose, after an assault by the managerial state for best part of 100 years.

Anonymous said...

Dear Trooper Thompson

This matter is already well established in the English law of tort: Rylands v Fletcher (1868) established that anyone who makes a non-natural use of property by bringing something onto the land, which then escapes and causes damage is liable.

This would cover escapes of gases and other pollutants into the air or watercourses.

As you rightly point out, no regulation required.

But what is a regulator to do, if he cannot regulate? And what of the fines the courts would impose for breach of regulations?


Trooper Thompson said...


thanks, I'll check that out. I don't think it needs to be seen any differently than even earlier cases, such as when someone neglected to keep their fences repaired and thus allowed their cattle to escape and cause damage. The question is one of property damage, and paying to make good that damage. I don't think there is any dispute over the property issues, i.e whose toxic sludge it was, and whose property has been damaged. I guess the question of criminal negligence is moot.

Trooper Thompson said...

As for your last point, the regulators could try selling double glazing, and the courts could, I dunno, apply the law. They might enjoy the change.