The Parable of the Referee

Dr. Zero illustrates the fallacy of the government acting as a “competitor” in the health care or any other market, by way of another parable:

Far from opposing all regulation, I maintain that clearly written, honestly enforced, minimally intrusive laws are both just and essential for wealth creation. A nation’s wealth lies in transactions between its citizens, and the pace of those transactions would be greatly reduced if consumers had no confidence in providers. Shopping malls would be considerably less active, if the shoppers had to assume every food product was potentially poisonous, every piece of consumer electronics could explode, and all of the merchants were thieves.

Clearly written and honestly enforced regulation is not easy to come by, these days. To understand why, imagine that two football teams assemble for a game, under the supervision of a single referee.

As the first play begins, one of the players complains that the referee has made illegal movements across the field. The referee laughs and explains he cannot be bound by the same rules that constrain the players, or he wouldn’t be able to do his job properly. He must be able to move up and down the field at will, in ways that would earn penalties for the players. Common sense supports his assertion, and the game continues.

The referee begins calling all sorts of penalties, invoking rules he has created on the fly. The players object, saying the rulebook accepted at the beginning of the game should be used without alterations. The referee mocks this notion. The field has grass, but the rulebook was written for a dirt field. It’s cold outside, and there have been some snow flurries. The game will continue into the night, under electric lights. The teams include players of different sizes and fitness levels. More complex rules are needed to ensure a good game!

Read the whole thing here.


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