Byline: Richard W. Rahn, SPECIAL TO THE WASHINGTON TIMES
How much do you think you know about anything? If you reflect for a moment, you will realize you probably know relatively little, even about those areas of knowledge where you have the greatest expertise.
F.A. Hayek, who arguably was the 20th century's greatest economist and political philosopher, correctly contended that even the smartest and wisest of us could only know an infinitesimal amount of all the world's knowledge and that even the collective knowledge in large private or government organizations is very limited. Fortunately, both individuals and private organizations can obtain much of the collective wisdom through prices that are determined by free markets.
Market determined prices tell us what is abundant and what is dear, and whether or not we are allocating scarce resources correctly, whether they be human skills or physical and financial capital.
Hayek was a critic of big government, in part, because he understood that government bureaucracies, largely insulated from market prices, would assume they have knowledge they do not have, create unrealistic expectations, and misallocate resources they control. The politicians in Congress endlessly assert they have knowledge that they do not, and hence construct policies and organizations that make things worse rather than better.
In recent weeks, we have seen a Washington minidrama played out because of this lack of realism on the part of some members of Congress.
There have been a number of cases of unsafe toys made in China reaching stores in the United States and elsewhere. Members of Congress were "outraged" and, of course, immediately sought to blame someone else. The culprits were the Chinese toy manufacturers, but to make it a political issue, members of Congress immediately blamed Bush appointee Nancy Nord, chairman of the Consumer Products Safety Commission (CSPC).
The CSPC is charged with regulating consumer products "against unreasonable risks of injuries." It regulates more than 15,000 categories of products and literally billions of individual products, from toys to power equipment to furniture. It regulates virtually everything we buy except food, drugs, cosmetics, medical devices, cars, boats, firearms, tobacco and alcohol. The CSPC is supposed to do all this with 420 employees.
The Senate then put together a bill demanding the CSPC do a number of things it does not have the resources to do, engage in a number of activities that would not be cost-effective, and do things beyond the commission's legal mandate, etc. In a politely worded letter to the senators, Mrs. Nord described what she and her staff believed were the problems with the proposed bill and advised the senators their proposed bill regarding her commission would likely make things worse rather than better. …