The famous scifi author (and self-described libertarian) David Brin tells a fascinating tale about how he contributed to getting the lead out of gasoline. He explains that an evil corporation (Ethyl Corporation) promoted leaded fuel. He explains that he helped organize a clean-car race where unleaded fuel did well. He suggests that this changed everything: by 1972, the government finally regulated the use of leaded fuel. It is a good thing too because lead is a terrible poison.
We have the evil corporation, the good activist and the benevolent government. We should be grateful for government regulations!
Of course, the tale is not complete.
The very high toxicity of lead was known well before 1970s. The use of lead in paint was prohibited in many countries at the beginning of the XXth century.
As early as 1920, we knew how to avoid lead with alcohol-gasoline blends. They were soon commercially available too.
Yet, by 1939, almost all gas sold in the US was lead-based, except for Sunoco. So how could lead-based gasoline take over? How could a toxic fuel win over safer alternatives?
The story is complicated, but we can identify two important factors in the US:
- The US Federal Trade Commission declared lead-based gasoline safe and it prevented competitors from denouncing it. Effectively, the government prevented competitors from telling consumers that they could buy a safer product. It also made lawsuits against the proponents of lead-based gasoline improbable.
- The main alternative to lead-based fuels was ethanol-based… at a time when the US had enacted the prohibition of alcohol and pushed underground its distilleries. Alcohol-based cars must have sounded a bit like cannabis-based cars today.
But Brin’s story is still historically accurate: by 1972, the US government did the right thing and banned the dangerous lead-based gas. Finally! Some courageous and altruistic politicians rose up! Evil companies like General Motors are finally told to do the right thing!
Wait? You really think that’s how I am going to finish the tale?
In 1970, General Motors had asked for the elimination of lead from gasoline to make its new catalytic converters workable.
So, what do you think got the government to eliminate lead from gasoline? David Brin and his forward-thinking clean-car race… or General Motors lobbying for its new technology?
But surely, Daniel, you don’t mean to tell us that politicians never stand up for what is right? Didn’t we solve the ozone layer crisis with the Montreal protocol? Didn’t the US government stand up to evil corporations like Dupont?
In fact, the regulations of the Montreal protocol were described by Dupont as having a tremendous market potential. Indeed, Dupont became favorable to the Montreal protocol once they acquired the patents (in 1986) that would allow them to market monopolistically their replacement technology. The Montreal protocol was signed a year later (1987).
This is a common pattern. People who hate corporations tend to be favorable to government regulations because they think that one opposes the other. They think regulations keep corporations in check. They sometimes do, but they often make things worse.
Regulating a society is like writing software. It sounds easy to amateurs, but it can be amazingly difficult. Software programmers typically cannot prove that their software will work. At best, in many practical cases, they can test it for typical cases. Unfortunately, government regulators don’t follow any of the good practices software programmers use. Worse: they never accept bug reports. Worse: they are often in an adversarial setting.
Any programmer will tell you what to do when testing is hard and failure is not an option: keep the software as simple as possible.
That’s not at all what government do. And, unsurprisingly, they are full of bugs.
Further reading:
- Bill Kovarik, Henry Ford, Charles Kettering and the Fuel of the Future, Automotive History Review, 1998.
- Timeline of alcohol fuel on Wikipedia.
- Michael S. Carolan, Ethanol versus Gasoline: The Contestation and Closure of a Socio-technical System in the USA, Soc Stud Sci. 2009.
Dedication: This post is dedicated to my family where, when something fails, we say that is has a bug.
“People who hate corporations tend to be favorable to government regulations because they think that one opposes the other.”
Do the same people realize that the cornerstone of the modern corporation is limited liability, i.e. the separation of ownership and responsibility, and that limited liability is a state granted privilege?
Looks like as case of trying to solve problems of ones own creation.
Definitely true that governments respond to the interests of corporations, as well as to other groups. Getting the lead out of gasoline was due to a combination of pressures from many groups (which is I think what David Brin was saying), not from just David Brin or just GM.
But you might give some of us who are skeptical of corporate power a little more credit. Some of us just want functioning, competitive markets. As Christopher commented above, externalities (like pollution) is one problem, as is limited information (like about what is safe) and unequal power. And, as you yourself have said in the past, very large corporations function more like communism internally and lose the ability to innovate, instead using power and local monopolies to force what they want, which is anti-competitive and anti-free market. Even Adam Smith recognized that governments should step in to correct these kinds of problems.
Sounds like we pretty much agree, then, with some minor differences around the edges, all sounds good.
By the way, love the line “while we are interpreting what dead guys would have said.” Good chuckle over my coffee when I hit that one.
By design, the only thing that motivates a corporation is the absolute pursuit of profit. Your examples above suggest that any time there is a social/environmental/etc problem of any kind, we should just wait for private industry to stumble upon a new technological or financial strategy that resolves the problem, as a side-effect. But by the same token, if they develop a technology or strategy that has extremely damaging social/environmental/health/etc effects, but yields greater profit, they will (and do) pursue that too. Put another way, the fitness function of this particular evolutionary process is money and *nothing else*.
Clearly designing laws is a challenging task, but I hardly think the solution is to leave ourselves at the mercy of (nearly) unfettered capitalism, and to hope that by some mere quirk of fate its next innovation helps more than it hinders.
I don’t hate corporations – they serve a role in our current system, as does government (and both are “buggy”!) But at least government is ostensibly intended to serve/protect its people, whereas corporations have no such motivation, except where it is forced upon them.
(BTW it’s gasoline.)
@Christopher Batty
You seem to be under the impression that I favor corporations over governments. If so, you are mistaken.
The point of my post is not that General Motors was doing good. The people running General Motors are responsible for inventing and then promoting worldwide use of a needlessly dangerous technology. As far as I am concerned, they should have been personally liable for their actions. Of course, that was impossible since the government went ahead and declared lead-based gasoline safe. Oh! And governments also grant the people owning corporations immunity so, again, no luck.
Regarding more current problems, I would be tempted to personally sue people running and owning coal-based power companies, as we have economical and clean substitutes (e.g., natural gas). Well, except that many of them are run by the government corporations (at least in Canada) so we cannot do that.
I also dislike the fact that we have a corporation like Monsanto, for example, that has a monopoly on the seeds backing our food supply. I think their patents are evil and bad for all of us. My problem then is that Monsanto does not create the patents: the government does.
Your examples above suggest that any time there is a social/environmental/etc problem of any kind, we should just wait for private industry to stumble upon a new technological or financial strategy that resolves the problem, as a side-effect.
I don’t think it is what it suggests. We had alternatives to lead-based gasoline from the very beginning.
If you follow the links in my post, you will learn that the government buried its own reports about how efficient these alternatives were.
The government made it impossible for the competition to inform people as to the danger of lead.
Clearly, it is a good thing that the government banned lead-based gasoline 50 years after it came to be. But it only did so after it became convenient for General Motors.
But at least government is ostensibly intended to serve/protect its people, whereas corporations have no such motivation, except where it is forced upon them.
The road to hell is paved with good intentions.
How does a corporation comes to be? It is created by the government. Why do corporation maximize profits for shareholders? Because it is their legal duty. You simply could not, legally, create a corporation that would not seek to maximize profit. The government would prevent it. It is against the law. The law enacted by the government.
Why are the corporate executives generally inattentive to the public good? Because corporate law tends to harm them if they fail to maximize profits, but protect them if they harm the public good.
The government makes up these rules. It could change them at will.
So why exactly should we blame corporations for their mindless pursuit of profit? If anything is to blame for that, it is the government, since the government requires it.
Limited liability is another government concept. It is clearly a moral hazard. By creating a company, you can do all sort of evil without being personally liable. The worst that can happen, in practice, is that you lose your stake in the company, period. Why should we blame corporations for this when it is the government that supports this limited liability? It is not like liberals did not oppose limited liability when it came to be. But people running the government felt that limited liability would be best (here we go back to the “good intentions” of government). Whether you believe that limited liability is a good thing or not, you cannot deny that it is a moral hazard, that it is the doing of government, and that it explains much about the ruthless corporate behaviour.
But let us look again at this belief that governments tend to pursue the public good whereas private individuals cannot be trusted. It does not stand scrutiny: the atrocities committed through governments in the last 100 years far, far outweigh the atrocities committed by private individuals. Businessmen did not drop a nuclear bomb on a city to make a point. The US government did.
So, yes, I agree, governments typically claim good intentions wheres corporations only claim to maximize profit. But this is part of one big story, all written by people running governments. You don’t have two opposite forces. Corporations are created by the government. Their mandate is dictated by government.
@Greg Linden
The story of lead in gasoline is definitively very complicated. But maybe it is worse than people might think… It is not at all clear that General Motors needed lead-based gasoline. It really does look like internal politics more than greed. General Motors invented lead-based gasoline… and that’s probably why it promoted it… but it could have prospered just as well with alternatives… but maybe the guys who invented lead-based gasoline did not want their invention put down.
So it looks like politics all the way down.
Even Adam Smith recognized that governments should step in to correct these kinds of problems.
I am not pro-corporate… at no point do I defend General Motors here.
Adam Smith was opposed to what we call today corporations. He would have hated General Motors.
I blame governments for the existence of corporations. And while we are interpreting what dead guys would have said, I think that Adam Smith would agree with me. He would find appalling the current corporate laws.
I find it repulsive that we bailed out General Motors (yes, Canada did it too) in 2008-2009. Yet I don’t blame General Motors for its good luck, I blame government. I think that Adam Smith would agree with me.
What we clearly have in 2013 is a collusion of government and corporations. Most of the time, new regulations are drafted so as to increase the power of corporations, not curb it.
I think Adam Smith would blame our poor economy on the collusion between government and corporations.
Very nice article showing that there are always two sides of the coin. However your article seems to associate Libertarianism with strict regulatory support. It is not entirely true. Libertarianism usually means less regulation and state intervention to personal freedoms.Also, there is a kind of paradox in regulation. Who is going to regulate the regulator?
I think the software analogy for regulations is right on the mark. Predicting unintended consequences is impossible. I also think that one can be a non-libertarian and also against the current government. The spectrum of possibilities is much broader than that.
@Mehmet Suzen
My post says nothing about what is libertarianism, I only put into context who David Brin says he is, politically.
Not all libertarians want fewer government regulations. The common thread among libertarians is a belief that the role of government is protect individual freedom.
That does not imply the absence of government intervention.
I appreciate the fact that spectrum of libertarian views greatly varies and your article do not say anything about it explicitly, for sure. But you said ironically “We should be grateful for government regulations!” in reference to Dr.Brin’s libertarian views. One may infer from this a libertarian would support government intervention/regulation automatically. It was to clarify for a reader who subconsciously may construct that association.
@Carson Chow
I agree on the broader spectrum of non-interventionism. Software analogy is interesting. However, regulating a software based things are easier than human society. For example, HTTP is a well written protocol and regulation is relatively easier, because if your browser do not comply with HTTP, it can’t function well.
Question is what is regulation? If regulation in that sense means establishing agnostic protocols for “mutual good” and “well-being of the society”. Can we quantify this via network science, game theory etc techniques? Too many parameters probably..