Sometimes regulations aimed at helping the poor end up hurting them. That doesn’t mean we should eschew regulation, but it does imply reason for caution.
Housing provides one example. The Portland Tribune recently carried an interesting piece on the way that building codes and other regulations keep the price of housing high, and reduce the availability of truly affordable housing for the working poor. Requirements that all bedrooms have a certain number of electrical outlets, for example, or that all bathrooms be disabled-accessible, raise costs not just for builders but for tenants. And in some places, builders who receive public subsidies to build low-cost housing are forced to pay union wages—even when paying slightly lower wages would let them build housing that is more affordable to those in need.
Another long-discussed example is automobile safety. Every advance in automobile safety has reduced fatalities and improved crash survivability, but has also raised the price of automobiles. I’m glad to drive a car that has seatbelts and anti-lock brakes and plenty of airbags. But then, I have a good job and can afford those things. Of course, I can’t afford the level of safety provided by, say, a full-sized Mercedes sedan. But there are plenty of people who can’t even afford a reasonably-safe compact car like mine, and for some of them the difference between affordable and unaffordable lies in a litany of safety features. The problem is even more pronounced in developing countries. A recent story out of India offered speculation that in that country, those who can’t afford cars with government-mandated safety features will have to opt for even less-safe two-wheeled forms of transportation.
A final example comes from the realm of labour regulations. Here in North America, we have the luxury of a wide range of on-the-job health and safety protections. Other places—including, for example, Bangladesh—are not so lucky. There, the problem is not that the regulations don’t exist. There are plenty of regulations in Bangladesh. The problem is that Bangladeshis literally cannot afford higher standards. Higher standards would price much of that country out of a job. And so, for that matter, would voluntary efforts by employers to improve safety conditions at their factories.
None of this means that we shouldn’t worry about safety standards when employing or making products for the poor. But every safety feature has a cost, and every cost represents money that could have been spent on something else, some alternative way in which we could have made the world a better place, including by making the world’s poor better off.
A colleague of mine, a fellow philosopher from the U.S., once suggested the following thought experiment: Imagine you owned a garment factory in Bangladesh, a factory that pays 1,000 Bangladeshi women the lowest wage allowable by law to make clothes for Canadians and Americans. Imagine you ended up with a million dollars in profits, and needed to figure out how to spend it. And imagine that you really, really wanted to use the money to do some good for the community in which your factory is located, to make it a better place. What should you do? Spend it on higher wagers? On improving workplace health and safety? “You know what I would do?” asked my colleague. “I would use that million dollars to build another factory, to give another thousand people jobs.”
Chris MacDonald is director of the Jim Pattison Ethical Leadership Education and Research Program at the Ted Rogers School of Management