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Consumer protection?

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NonAntiAnarchist Posted: Tue, Jan 10 2012 7:25 AM

Someone said this to me. I'm doing research on my own right now, but any help would be appreciated.

Following up on what my dad said, I want to point out that we actually knew a time before consumer protections. The 1890's were a time of squalid slums in Manhattan (and much of the rest of the world), where unscrupulous landlords would build floor upon floor of unsafe housing to meet the consumer demand posed by the new immigrants. Then they would add one more floor and... the building would collapse, killing men, women, and children. These buildings did not have windows for ventilation, let alone for light. Many people died of tuberculosis. 

Jacob Riis documented these conditions in a book, How the Other Half Lives. You can see images from the book via Google Image. 

In 1901, the NY legislature passes the Tenement Housing Act. All summer, the sound of the saw was heard as holes for windows were cut. People's lives were instantly improved. They were still poor, but now they had light and ventilation -- no small improvement. Soon, structures were improved so that they would not collapse, and landlords were held accountable for unsafe buildings.

It's hard to argue that our market functioned better before building codes. Imagine how hard it would be to get any work done under such conditions, how loathe you would be to leave your wife and children in such a dwelling as you went to work, how poorly rested you would be after spending a night cramped together with other workers on a floor with no ventilation in the heat of the summer.

I could tell a similar story about safe food, but Upton Sinclair already has. It takes place in Back of the Yards, a neighborhood a few miles west of my home, where I now do my grocery shopping in full confidence because of the The Pure Food and Drug Act of June 30, 1906 and subsequent legislation. 

In other words, these laws were written for a reason, and if you think the market alone can solve these problems, spend a little more time studying the 19th century.

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Wheylous replied on Tue, Jan 10 2012 8:25 AM

Alright, I'll call his unsafe building codes and raise him a Hitler.

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This journal article refutes just about everything in the post, and highlights outcomes you'd expect from standard economic theory (the pricing out of lower-income residents, etc.). It's the most epic source ever.

http://www.cato.org/pubs/journal/cj22n3/cj22n3-7.pdf

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Autolykos replied on Tue, Jan 10 2012 8:55 AM

+1

The TL;DR version is that Progressive-Era regulations like the New York State Tenement House Act were band-aids for pre-existing government regulations.

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Wheylous replied on Tue, Jan 10 2012 9:02 AM

So was housing in the free market dangerous over the long term without government regulations?

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Autolykos replied on Tue, Jan 10 2012 9:12 AM

If you're asking that question in the historical context, the answer is that we don't know. There've always been government regulations in the housing market. However, since these government regulations prevented (some) free-market resolutions of pre-existing problems, I think it's safe to say that a free market in housing and building construction would've been less dangerous over the long term - if not also in the short term.

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I also remember some takes on the Pure Food & Drug Act as basically an industry subsidy and PR stunt.  The industries were paying for thier own inspectors and such, and most meat was not of poor quality.  The big players were able to foist off the costs of inspection on the tax payers, and there wasn't any real marked improvement from before the act.  I'll see if I can dredge that up.

Regardless, The Jungle was a sensationalist novel, not a peer reviewed study.  I always love when people bring it up as an example of "how things were".

I also had to chuckle a bit when I was reading Ayn Rand's We the Living (which to date is the only one of her books I've read, not a fan of her overall philsophy), and found a not so subtle dig at The Jungle.  The novel is set in the early Soviet Union during the 20's.  There's a part where the main character is recounting what western literature the communists are letting through:

  • [In these novels] a poor, honest worker was always sent to jail for stealing a loaf of bread to feed the starving mother of his pretty young wife who had been raped by a capitalist and committed suicide thereafter, for which the all-powerful capitalist fired her husband from the factory, so that the child had to beg on the streets and was run over by the capitalist's limousine with sparking fenders and a chauffeur in uniform.
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Autolykos replied on Tue, Jan 10 2012 9:27 AM

One of the essential notions of "Progressivism" was that monopoly was efficient. Competition produced "duplication of effort" which was seen as inherently wasteful. Businessmen had a natural motivation to get to the ears of the "Progressives", as they could subsequently benefit from favorable government regulation. An obvious way they could benefit is by subsidizing the costs of (parts of) their operations, as with food and drug inspection.

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Autolykos replied on Tue, Jan 10 2012 9:31 AM

Oh, here's another interesting tidbit:

The old-style tenement houses, that were so unsafe and unsanitary, were not demolished by the New York State Tenement House Act of 1901. Instead, they were grandfathered out of the new regulations. So how exactly did that legislation make those older buildings safer?

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Wheylous replied on Tue, Jan 10 2012 10:07 AM

LE, I wrote an article on the Meat Inspection Act here:

http://wiki.mises.org/wiki/Meat_packing

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Wheylous replied on Tue, Jan 10 2012 10:38 AM

Alright, the last three in the above post are not that useful, sorry...

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@Wheylous

Haha, it's okay. 

@Auto

Not only did the old-style tenemant houses remain, but if I remember correctly from reading the paper I linked, they actually attracted more residents after the 1901 "reform" took place!

This is a perfect topic for a paper, I think. I'm gonna do my best, and maybe it'll be eligible to be a Mises Daily. But it will at least give a good go-to when faced with these anti-historical claims on the part of leftists. I've yet to read the chapter on "Good Government" in Rollback, but I wouldn't be surprised if Tom Woods countered some of these same claims already. Just to note, that book is an awesome statistical thwarting of just about any pro-government position.

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Autolykos replied on Tue, Jan 10 2012 10:54 AM

NonAntiAnarchist:
Not only did the old-style tenemant houses remain, but if I remember correctly from reading the paper I linked, they actually attracted more residents after the 1901 "reform" took place!

You remember correctly. Towards the end, the paper reports that Lower East Side neighborhoods were more crowded in 1910 than they were in 1901, on the eve of the "reform".

Good luck on your paper!

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Wheylous replied on Wed, Jun 13 2012 7:40 AM

May the dead rise once more...

That being said, how is that paper going?

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mustang19 replied on Wed, Jun 13 2012 3:20 PM

One of the essential notions of "Progressivism" was that monopoly was efficient.

Although true in some cases, that's an oversimplification at best, considering conservative opposition to enforcement of the Sherman Act.

Not only did the old-style tenemant houses remain, but if I remember correctly from reading the paper I linked, they actually attracted more residents after the 1901 "reform" took place!

I agree with you there. But like Auto said, we have no idea to know when the market would eventually get its act to together and build safe housing. The building codes in New York were not ideal, and it could have been better to replace height limits with safety inspections as is done today, or only maintain height limits until there were investors willing to build safer high rises. But the planning committee doing nothing is a terrible second-worst option.

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