THE BLOG
10/29/2012 03:52 pm ET Updated Dec 29, 2012

Shot Across the Bow

For those agitating for small government, who believe government is the problem, take note of the deadly meningitis outbreak now spreading to 18 states. This is a harbinger of our future if we continue to cut government services. This outbreak is not an assault of nature but the result of sloppy pharmaceutical processing. The New England Compounding Center (NECC) of Framington, Mass., made steroids (preservative-free methylprednisolone acetate) for injection into the spinal column. The problem is that they did so in non-sterile conditions, leading to contamination with a fungus that can cause a rare form of meningitis. Often misunderstood by the general public, the FDA currently does not regulate or oversee compounding companies like NECC, which have long operated in a legal gray area between state and federal laws. We have here a classic example of what happens in the absence of federal regulation.

But the meningitis outbreak is such big news because as a general rule the FAA regulates the pharmaceutical industry with sufficient vigor that routine audits typically uncover problems before they impact patients so that these problems are rare; that will not be the case if we continued to disparage and assault the regulatory authority of the government. The meningitis outbreak won't be news but routine fare. People forget that the FDA acquired its modern moral and legal authority to regulate drugs when the agency, in spite of intense pressure, refused to approve thalidomide for use in the United States, thereby saving thousands of children from horrible deformities that were later seen in Europe. Regulations are not developed in a vacuum.

The dirty little secret in the pharmaceutical industry is that drug companies welcome FDA oversight. The process of drug development is long and expensive, costing more than a billion dollars and taking more than a decade to bring a new drug to market. No company or investors want to risk this by bringing to market a drug that is ultimately ineffective or dangerous; or using manufacturing techniques that risk contamination. In the absence of regulation and oversight, though, companies will have the countermanding incentive to cut corners, to cut costs to remain competitive. Doing so is risky, but we know companies take such risks. FDA oversight eliminates the potential advantage of cutting corners: federal oversight and regulation creates a stable environment in which all companies must invest in the same safety measures, making the huge investment in safe drug development a rational one instead of one creating a disadvantage with competitors.

The compelling need for oversight does not end with drugs. Upton Sinclair's The Jungle should be required reading for anyone promoting the idea that government is the problem. Just as with drug development, the safety of our food supply depends on federal oversight and coordination. Even now with resources stretched too thin the United States sees 5,000 deaths per year from food poisoning. More than 325,000 people are hospitalized each year after consuming contaminated food. In addition to human anguish that costs the economy about $152 billion per year. Since foods are shipped across state lines, devolving food safety authority to each state makes little sense. If you like the idea of having human parts, rat hair and feces and other filth ground up with your beef then small government is your best bet.

Conservatives fail to realize that federal regulations did not come from thin air but in response to gross abuses by industry lacking any oversight. Consider the meat packing industry before the USDA. In the absence of regulation, and punishing fines to enforce them, industry has no incentive to invest in the equipment, personnel and procedures necessary to ensure food or drug safety. This reality is something that should be inherently obvious to those who constantly appeal to the magic of market forces. Unless there is a level playing field enforced federally across all states, any company that invests in food or drug safety would be at an immediate disadvantage to all others that do not. Even creating a niche market based on a reputation for cleanliness and safety would be difficult to sustain without the ability to certify the claim independently.

Note too our nationally-coordinated response to Hurricane Sandy, which could impact 14 states. Mitt Romney finds such use of federal funds to be an immoral use of resources. Romney wants to disband FEMA and give to the states ("first responders") the funds necessary to respond to emergencies. "Every time you have an occasion to take something from the federal government and send it back to the states, that's the right direction. And if you can go even further, and send it back to the private sector, that's even better." When asked to clarify if he really means to include disaster relief in that, he said, "Absolutely. We cannot -- we cannot afford to do those things without jeopardizing the future for our kids." Of course your kid won't have much of a future if he is floating down the river. What better entity to respond to an emergency than a bankrupt state? In case we misunderstood his meaning, the Romney campaign put out today this statement: "Gov. Romney wants to ensure states, who are the first responders and are in the best position to aid impacted individuals and communities, have the resources and assistance they need to cope with natural disasters."

Even stranger, Romney went further and said that we should privatize disaster relief. This from a businessman who is supposed to understand profit. One wonders how the private sector, which must generate profits to survive, would be suited to take on the unknown costs of deadly hurricanes, floods, tornadoes and earthquakes. What revenue would offset those costs? Government contracts? So much for privatization; that is a recipe for corruption.

But this is Romney's solution to almost every challenge -- give money to the states or privatize. The problem with emergencies: they do not respect state boundaries. A potential disaster like Sandy, spreading across thousands of miles, requires a response beyond what any one state can provide; and in the absence of effective coordination resources are wasted or applied inefficiently to ill effect or at cross purposes. We saw with Katrina what will happen if we weaken FEMA, which Bush did by appointing as its head Michael Brown, who was grossly incompetent for the task.

Conservatives fighting for small government are naïve. Yes, government is inherently inefficient and wasteful; and yes, government should be as big as necessary but no bigger. But the key there is as big as necessary; and conservatives have the dangerous view that not much is necessary. They hold a Pollyanna-ish view of what states can do. Conservatives are right that regulations can become obsolete, grow too onerous or become debilitating to industry. But they want to throw the baby out with the bathwater; rather than reform they want to kill regulations. Conservatives can't complain next time they see a rat hair sticking out of their hotdog. They can't lament when a loved one dies from drug contamination or when a child gets ill from bad meat. This is the natural consequence of their political philosophy.