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ADTI ISSUE BRIEF April 12. 1995 0 94 ® a 4 d ® ;ie TOCQL'EG[LL'c , S - . : U - .7 v "Thomas Jefferson and the End of the Nanny State" Bv Stuart Anderson. Polic:• Director. :-lleris de Tvcaueville Institution 0 Executive Summarv Attempts by elected oft:ciais. Jove^unent aaencies. and consumer groups to micro- manaae the lives of citizens has turned Amer:c : a%rav from a society iounded on the principles of limited aovernment and oersonal resnonsibilin-. Asenc:es like the Food and Drua Administration ( FD A). the Em•ironmental Protection AQer.ct: (EPA). and the Consumer Products Safetv Commission (CPSC) are ;,ot onit• usuroing the roiz of parents but they are treatinQ Americans like children. .-wencies and their suDporters are flLxated on how we consume. watch TV. and aet to work in the motzuna. It anuears we no ion_Qer live in a Jeffersonian state. Today. Americans live in a.vannv state. 40 For more information contact the Alexis de Tocqueville Institution at (703) 351-4969. O The Alexis de Tocqueville Institution ~ ~ 2000 15th Street Yorth. Suite 501. ariinQton. VA :==01 Tel: 703-351-4969 Fax: "03-351-0090 W ~ ~ CD C3T

A L E X I S About the Ale.Yis de Tocqueville Institution de TOCQUEVILLE . N 3 r , T U i I O N The Alexis de Tocqueville Institution (AdTI) is a non-profit. non-partisan education and research orQanization dedicated to the promotion oi capitalism and democracy, both in the United States and throuQhout the world. AdTI believes. as Alexis de Tocatieville did, that capitalism and democracv must ultimateiv stand toaether or fall toaether: neither can exist for long without the other. AdTI studies a wide varietz• of domestic and international public policy issues, including the • economic and cultural benefits of immiQration. AdTI's research has been cited in major publications including the :Vew York Times. Wall Street Journal, Washington Post, Los Angeles Times. :Vewsweek. Financial Times. Inti•estors Business Dailv, iVational Journal and Forbes Magazine among others. For more information. please contact Stuart Anderson. policy director of the Alexis de Tocqueville Institution at (703) 351-4969. Note: vothina in this report should be construed as necessarilv rerlectins the views of the Alexis •de Tocaueviile Institution or its co-chairmea, directors. and advisors. or as an attempt to aid or ;:inder ihe passage of any legislation before the U.S. Congress.

"Thomas Jefferson and the End of the.Nannv State" Y By Stuart Anderson, Policy Director, Alezis de Tocqueville Institution Two models of democratic government have operated in America's history. In one model, the government provides sufficient sanctions to punish citizens who harm other citizens but otherwise allows Americans to covern their own daily affairs. Thomas Jefferson set forth this model in his influential writings and during his tenure in public life.. However, a second view of democratic aovernment has evolved over the last half of • the 20th century that sets forth a different vision. Under this second model. it is the role of government to oversee the daily lives of Americans and to take whatever actions deemed necessary to prevent people from harming themselves. The Jeffersonian model features restraint on the part of aovernment officials. a restraint characterized by treatins citizens as adults responsible for their own actions. The second model differs from Jefferson's in that people are viewed by the government not as adults, but as children. Today we need only to read a daily newspaper to see the conflict between freedom and security, and between liberty and equality. For it appears • we no lonser live in a Jeffersonian state. Today, Americans live in a Nanny state. The Nanny state is most distino-uished by the oversight established by elected officials and by state and federal agencies over what Americans choose to consume and how they decide to manage their own businesses and property. In Washington. D.C. recently two Congressmen marched through a supermarket and vowed to do somethin(2 about the high prices of cereal. The Congressmen produced a letter they wrote to Attorney General Janet Reno asking her to do something about the high prices and charged that "as a percentasie of the retail price, the cereal industry devotes more money from sales to marketing and profit than any other food surveved. "' The imr)lication of the Con-aressmen's argument is that the federal government should oversee, on behalf of consumers, precisely the percentage of revenues a company devotes to "marketinQ and profiu. " Such an oversight authority, if carried throuahout the economy, would compel each company to check periodically with the Justice DeDartment to determine whether it had become too successful or had devoted too much money to advertising its products. Two salient facts place the cereal episode in its proper context. First, the choices of American consumers include not only different cereal brands of varying prices. but also the choice not to buy cereal at all. If Kellogg or General Mills price their products out of the market then it is those companies that are the real losers. Second. the research performed by the ConLyressmen did not mention that 60 % of cereal in the United States is purchased through coupons or during sales. A similar study released annually by Senator Dale Bumpers (D-AK) to show significant pharmaceutical price increases is also of limited use since it ignores key factors, such as that many prescription drugs are sold at substantial discounts to bulk purchasers, includina larQe medical plans, hospitals and HMOs. As Reason magazine notes, the 1

simple fact is that "when adjusted for coupons. cereal prices have risen between 1% and 2 o annually since 1989 - lower than the rate of inflation. "'- Although the ConQressmen complained about a monopoly - one with four major competitors, albeit with a combined 85 9 market share - they contradicted themselves by encouraaina consumers to buy generic cereals, illustrating that Americans are not actually in the clutches of these big corporations. The ConL7ressmen believed it was within their purview to be consumer reporters on behalf of the rest of Americans. At one point durinQ the news event. Rep. Charles • Schumer (D-NY) complained that it is diff icult for consumers to tind aeneric cereals on the shelves. ^ In 1995, the EPA (Environmental Protection Agency) promulasted new ' mandates on businesses that intruded on what some would call Americans' unwritten Constitutional rizht - the riL,'ht to drive their cars. An outcry from businesses forced the EPA to back off on its plans but. in essence. the asencv wanted any company with more than 100 employees (in certain aeoaraphical areas ) to reduce the number of people who drive their automobiles to work. Even the hiQhest estimates of such a program's effect on air pollution placed the impact at less than • a .5% reduction in emissions. - The spate of EPA driving~-related mandates. which also include new Qasoline nozzles. reformulated fuels, and centralized auto emission testins centers, have caused a citizen backlash. This has exasperated some active in the environmental movement. Joseph Minott. executive director of the non- protit Clean Air Council in Philadelphia. said of motorists who have opposed various EPA moves. "They're like hyperactive children. ~ ' They just keep shouting'No, No, No,' no matter what's suggested. " The conflict is essentially about freedom, and some environmentalists, to their credit, recognize that. Stuart Atler of the Clean Air Council noted that the EPA's trip reduction proQram died because there is now no enforcement, though the law remains on the books. "Most companies will not do it now because no one is forcing them to do it. It's pretty sad." In essence, employers do not wish to restrict their employees freedom of movement. Atler says, "Employees want to come and zo as they please. They want the freedom. " Atler adds, however, that. in his view, this "extra inch of freedom" carries an environmental cost. Atler concedes that it is "impossible to measure" the benefits of the EPA's defunct trip-reduction proaram.' Still. one must ask the question: If citizens are unwilling to take steps that the EPA and outside groups insist are good for them. should citizens be forced to take them? Entertainment is another way where freedom and at least theoretical societal benefits clash. A parent invites a nanny to watch her chiIdren. but when the government acts on behalf of kids it can usurp the proper role of the parent and perform acts that carry serious First Amendment implications. Just last year, the federal Consumer Products Safety Commission (CPSC) "strongly warned" Warner Bros. films to observe the CPSC's safety rules in scenes that involved Macaulav Culkin ridinLy an all-terrain vehicle (ATV) in the movie Richie Rich. "Kids don't know the difference between reality and the movies. When they see a role model appearing to drive around unsafely, that sets a bad example. "' The CPSC has studied whether is has the authority to regulate films as consumer products. Under such a theory, any work of ~

fiction produced in :Lmerica would have to be previewed and approved by the Consumer Products Safety Commission. While such a move would not likely pass Constitutional muster, that it would even be considered shows how far away from basic principles some people in government have strayed. In an extraordinary statement about the Richie Rich action. Ann Brown. President Clinton's appointee to chair the CPSC said the followinz: "But if you see there is a consumer behavior in a movie, that kids are not going to be able to differentiate between reality and a movie - and they would want to imitate doinQ wheelies on ATVs. which are intrinsically danaerous to beain ~ with - then I could use this chairmanship as a bully pulpit and express that. That's a matter of free speech. Of course, then. [for] the movie company, it's a matter of their free speech. They can decide to listen or not to listen. " However, Tom Holt. author of Tiee Rise of the .Vannv State. notes. "The difference, of course, is that the CPSC chairman's 'free speech' is a real or implied threat of regulatory action. "' How we watch television is a related area where the Nanny state has become more active. In addition to various proposals by public interest groups and government officials to require TV stations to show a certain percentage of children s • programmina, advocates are attempting to block deregulation of the cable industry. The public interest aroup the Consumer Federation of America recentiv arstted that the Lyovernment should not dereaulate the cable industry because there will be a laz where monopolies in some areas will still exist.° What thev fail to note is that state and local governments. employing federal law. are the ones that granted monopoly status to cable companies in the first place. ' Moreover. as in the cas=e of cereal, cable companies are restrained by the understanding that families will not pay an unlimited amount of money for an optional product. Even without diQital satellite alternatives. and soon telephone company competitors. adults are smart enough to decide simply to ao without cable programming if the service is deemed overpriced. Yet this is the linchpin of the Nanny state - the belief that people are not smart enouah to decide matters for themselves. v Consumer groups, which author Tom Holt calls "consumerists." were leading advocates last vear of both a sinQle-payer. government health system and of the Clinton health care reform plan that would have put health maintenance organizations (HMOs) in an advantaQed position. Holt writes. "HMOs fit with consumerists' preferences for 'collective efforts' and price controls. In exchan_ae for a rlat fee. HMO consumers accept rationing of services. Some treatments mav be denied, and routine services with low out-of-pocket costs are in a sense rationed by long waits. Many people evidentlv are wilIino to make these trade- offs. But in a relatively open medical market, fee-for-service and less rizorously manaaed care arrangements act as a safety valve on HMOs' rationinQ strategies. Consumerists essentially would impose the HMO model on all medical care. "' At the federal level, excessive maternalism has intruded in a danaerous way on the doctor-patient relationship. A Wall Street Journal editorial described the harrowinQ impact of decisions by the Food and DruR Administration (FDA) on a 75- vear-old woman from Portland. Maine: The xoman was diagnosed some weeks ago O ~ 3 ~ W ~ ~ ~ C3t -Q

• 0 to have an aneurysm the size of a golf ball in her cavernous carotid artery. Pressure built against her third cranial nerve until she could barely open her eyes. She risked blindness or a rupture that could cause a stroke, yet the aneurysm's location made traditional brain surgery close to impossible. Dr. Eddie Kwan of Tufts University ...proposed to use a device called a detachable silicone balloon.... Tufts University, it turns out, isn't one of the 25 U.S. sites approved under newly restrictive FDA rules for use of the balloon (which is widely available outside the U.S.). Neither is a site anywhere else in New England. But 75-year-olds with golf-ball sized aneurysms in danger of rupture aren't good candidates for travel. So Dr. Kwan proceeded to see if he could get permission through the bureaucratic politics at Commissioner David Kessler's FDA. "The first time I talked to someone at FDA. he just brushed me off." says Dr. Kwan of his phone call last Wednesday. "I talked to so many people I can't remember their ttames. " After involvina other Tufts administrators in a series of phone calls to the FDA, the university was told to fax a request for immediate emergency approval. Another four days went by before any response from the agency was heard. After another day of exchanging phone calls, the FDA's "branch chief for neuroloeicaI devices," an engineer, decided to grant Dr. Kwan permission to operate with the silicone balloon. Thanks to the operation the woman's evesisht. and bv some accounts her life, was saved. The Wall Street Journal asked: What about all the other patients? What about patients who don't have a doctor or hospital willing to risk retribution by pestering the FDA?...How is it that an obscure bureaucrat without a medical deEree can become in effect the Chief of American Neuroradiolo¢y, with life-or-death decisions in his hand.3 A defender of the FDA would likely argue that the 75-year-old woman's situation was an isolated case. However. a more I prudent approach would-be to reexamine a process whereby the FDA is so intimately involved in such personal matters and across such a wide range of areas. The real issue is the secondary consequences caused by a national bureaucratic approach to medicine. Proponents of a certain government program or agency, whether it is the FDA or the EPA will often defend it by pointing out the "intention" of the program or agency. The intention is always positive, whether it is for greater safety, better health, or a cleaner environment, since few people draft legislation or regulations specifically intended to harm others. Yet each government program or agency must be examined in its larger context, dissecting both the intended and unintended consequences of a program. After all, no one at the FDA would say, "Yes, we intend to make it as difficult as possible for a 75- year-old woman to receive permission for surgery that would prevent her death or blindness. " However, the unintended consequence of FDA policies is precisely that. Henry Hazlitt helped explain this paradox that splits the Jeffersonian, limited government state from the Nanny state. Though Hazlirt was discussing economics, his dissection of the problem reaches across disciplines. He wrote: There is a factor that spawns new economic fallacies everv dav. This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences. In this lies the whole difference between good economics and bad. The bad economist sees only what immediatelv strikes the eve; the good economist also looks beyond. The bad economist sees only the 4

direct conseo,uences of a proposed course: the good economist looks also at the longer and indirect consequences.9 In addition to interfering with the doctor-patient relationship, the system set up by the FDA to protect consumers has carried the indirect consequences of making life- saving drugs unavailable to those who need them. Sam Kazman of the Competitive Enterprise Institute says it is disingenuous for the FDA to announce that it has just approved a drug that will save a certain number of lives. Kazman notes. "If a dru2 that has just been approved by FDA will start saving lives tomorrow, how many people • died yesterday waiting for the aQency to act?" He estimates that as many as 2?.000 people may have died during FDA delays before the approval of the drug streptokinase, which dissolves clots in heart attack sufferers. Between 8,000 and 15.000 people with arthritis may have died while waitina for FDA approval of misoprostol. which reduces gastric ulcers. ~0 Efforts to act as the maternal guardians of Americans indeed c:m genuine costs. In 1991, in an effort aimed at protecting citizens, FDA commissioner - David Kessler forbid pharmaceutical firms from tellina doctors about new uses for druss that had already received FDA approval. The FDA's stated policy was as follows: "While physicians may prescribe products for off-label uses, promotion of such uses is ~ illegal, Kessler said... [the] FDA is prepared to enforce the law through legal steps such as seizure, injunction and prosecution. " The problem with this policy, as pointed out by the New York Times is that. "In the fast- changing world of cancer treatment. the uses on an FDA label often la; years behind standard treatment. Today. cancer specialists estimate that 60% of legitimate chemotherapy falls outside of the uses recognized by the [FDA]. " The chairman of the Los Anseles Oncologic Institute. Dr. Cary Presant, has said: The oncology community lmows how to apply new drugs very rapidly. Results of recent clinical trials come out at national meetings and through oncology organizations, so we lozow the results of research six months before it gets into medical literature, tow years before it is accepted by the three compendia and fives years before it on [an] FDA label.... I've had patients die waiting for drugs. No one claims the FDA "intends" to allow patients to die cvaiting for drugs, rather, it is clearly an unintended consequence of a system whereby a government agency has zealously taken on the maternal role of protector. This problem can be seen internationally as well. In describing Britain's National Health Service (NHS), a largely aovernment- run system of free health care, the Washington Post noted. "Each week, a new horror story emerges in the press. such as the girl with leukemia whom the NHS declined to treat or the infant sent home from an NHS facility with a hypodermic needle embedded in his bottom. " The irony is that America came close last year to implementing such a system here. "[Britain's secretary for state healthJ is implementing changes to make it more efficient that were born in the era of Prime Minister Margaret Thatcher, changes that ciosely resemble in concept the defunct health care plan promoted by President Clinton"" The key problem with Britain's health system can be discerned in its nanny-like approach. "Hundreds of local, semi- autonomous ' purchasing authorities'. ..are 5

supposed to seek the most efficient means of obtaining health care on behalf of consumers who live in their areas. "[Emphasis added. ) The crux of the problem is clear. A system wherebv the government obtains health care. or any szood, "on behalf" of consumers establishes a disconnect between consumer and producer. This disconnect, combined with government restrictions on the number of specialists, has led to increased mortality among British women with cancer -- only 6 in 10 women with breast cancer survive more than five years in Great Britain. compared to 80% of American women. While this lower mortality rate was not the intention of the British health care system. nor was it that an • astor.:shing 60% of British cancer patients never see a specialist, the facts speak for themselves. ~ In Thomas Sowell's seminal work Conflict of Visions he explained why for many people the intention of a government action or program is the crucial element. = Sowell divides people's view of the world into essentially two camps - those with an "unconstrained" vision and those with a "constrained" vision. A vision, as Sowell notes, is essentiailv one's sense of how the world works. The "unconstrained" vision possesses great faith in human knowledge and in applying this knowledge through • reason. "Implicit in the unconstrained vision is a profound inequality between the conclusions of 'persons of narrow views' and those with 'cultivated' minds...... Uso implicit in the unconstrained vision is the view that the relevant comparison is between the beliefs of one sort of person and another.... rather than between svstemic processes... " Sowell places the notion oi a "philosopher-king" within the unconstrained vision. and points to such thinkers as Jean- Jacques Rousseau and economist John 6 Kenneth Galbraith.13 In contrast. the "constrained" vision is one that recognizes "the moral limitations of man in general. and his egocentricity in particular. " Adam Smith, notes Sowell, treated man's moral limits as "inherent facts of life, the basic constraints in his vision." For Smith, "The fundamental moral and social challenge was to make the best of the possibilities which existed within that constraint. rather than dissipate energies in an attempt to change human nature - an attempt that Smith treated as both vain and pointless. " To Adam Smith and his constrained vision, intentions were irrelevant, but to those of unconstrained vision intentions are the key. Sowell writes: Just as the unconstrained vision urges judicial activism on judges, it urges 'social responsibility' upon businessmen - that they should hire, invest, donate. and otherwise conduct their businesses with an eye to producing specific benefits to society at large. The socially responsible businessman should, for example, hire the disadvantaged, invest in things that seem most needed by society rather than those most profitable to his nrm. and rum part of the proceeds over to charitable and cultural activities, rather than pay all the proceeds out to the stockholders or plow them back into the business. The constrained vision sees such things as outside the competence of businessmen. given the wider ramifications of such decisions in a complex systemic process. According to the constrained vision of human lmowledQe, what is within the businessman's competence is the running of a particular firm so as to promote its prosperity, within the law. It is the systemic effect of competition, rather than the individual intentions of businessmen, which this vision relies on to produce social benetit. According to Adam Smith, it is when the businessman "intends only his own :ain" that he contributes - via the process of competition - to promote the social good "more effectually than when he really intends to promote it." Smitit added: "I have never known much good done by those who affected to trade for the public good." The writings of those with the constrained vision abound with examples of counterproductive i

consequences of well-intentioned policies. But to those with the unconstrained vision, this is simply seizing upon isolated mistakes that are correctable. M' order to resist tendencies that are socially beneficial on the whole. However, to those with the constrained vision, ihese mistakes are not happenstances. but symptoms of what to expect when the inherent limitations of individuals are ignored and systemic processes for coping with these limitations are deranged by specific tinkering. :' The unconstrained vision is most interested in the "desired results. " while the constrained vision is more concerned with the "process." As Sowell writes. "In the constrained vision, social processes are described not in terms of intentions or ultimate zoals. but in terms of the systemic • characteristics deemed necessarv to contribute to those goals -'property rishts.' free enterprise.' or 'strict construction' of the Constitution, for example.... The unconstrained vision speaks directly of desired results."15 Such "desired results" may include a healthier lifestyle for Americans. but the way that result' comes about - the means to the end - and who decides - the Qovernment or the individual - are crucial in determining the type of society we live in. The unconstrained vision of those advocatinQ a type of Nanny state can be seen daily across America. The belief that a particular officials knows best for everyone bv virtue of an electoral victorv is evident in ~Maryland. One of the first major acts performed bv Maryland's new Governor. and advocated bv consumer aroups. was to promulgate a ban on smoking in all public and private workplaces. In practice. this meant that bar patrons drinking liquor and eating potato chips and salty peanuts would have been protected by the government from ciaarette smoke. The Maryland legislature forced Governor Parris Glendenins to allow exceptions in the ban for restaurant and bar ~ owners. Now such establishments can allow smokins but only if they allocate 60% of their space for non-smoking. This compromise. however, overlooks the basic principle that was lost. Today in Maryland a small business owner cannot leQallv smoke a ciQar or cizarette on his or her own property. And to force compliance, Maryland's Department of Labor will "visit owners and get them" to cooperate. according to a state official.'6 What has been lost is the concept that no state aovernment should so intrude on a business owner's riQht to set the minutiae of his or her company's workplace policies. Government orficials..spurred on by consumer grouos, are treadina deeper and deeper into previously untouched domains. As Thomas Holt writes. "In recent years consumerist attention has turned to individual behavior. " He points out that the head of Ralph Nader's Center for Science in the Public Interest (CSPI) has said. "If we had our way everyone would be dinina on whole 2rains. beans. ve2etables, and fruit, alonQ with Iow-fat dairv ~ foods and mavbe a little lean meat or poultry. All of the food would be fresh and unprocessed, and grown orzanically on local farms. "' This is what Thomas Hoit is writinQ about when he notes that. "Activists have attemoted to modifv or reQulate what were once considered private matters.... It is not enoush that activists hector manufacturers and scare consumers with warninQ labels. Some consumer groups simr)lv see no limit to the legitimate reach of government power. They recognize no boundaries between public and private 17 Iife.' A government that becomes so enmeshed in our daily lives soon trivializes its prerogatives. Elected leaders lose their moral authority to act with public confidence when genuine state interests are at stake. To ~

~ involve itself in such private matters as smoking and eating undermines the serious duties government must perform. Whether or not to allow smoking in a factory or office building should be decided by the landlord or the proprietor, -r between the employer and employees, not by the government. It is no coincidence that while the govetnment has become more involved in Americans' daily lives over the past 30 years, every public opinion poll has shown that Americans' faith in government has plummeted. Hope, however, sprinQs eternal, and one place is in Thomas Jefferson's home state. For the second consecutive year Virginia Gov. George Allen has vetoed a bill • that would make it illegal for kids to ride in a pickup truck bed on interstate highways. In explaining his reason for the veto, Governor Allen declared, "There must be some limit to governmental paternalism. People inevitably exercise less personal responsibility when a paternalist government repeatedly intervenes to protect them from dangers that common sense should tell them to guard against on their own. "`9 Too few elected oficials voluntarily restrain their power to inflict their will over other citizens. And too many relish in micro-managing the affairs of others. The Governor's example shows that it is eminently possible for • political leaders to adopt policies that favor limited government and reject the model of the Nanny state. America needs to return to the idea that those in sovernment should treat those they govern as fellow citizens, and not act as if they are elders imposing their will on children. No one illustrated the difference in the two approaches better than Thomas Jefferson in his first Inaugural Address. On that occasion he declared, "Still one thins more. fellow citizens - a wise and fruaal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good qovernment. " And this is the guiding principle of government to which America . should return. 8