Our Enemy the FDA (Protecting Us to Death)
c Mark W. Mugler 1996

"Those who would give up essential liberty to purchase a little
temporary safety deserve neither liberty nor safety." (Benjamin

"We shall never prevent the abuse of power if we are not prepared to
limit power in a way which occasionally may also prevent its use for
desirable purposes."  (Friedrich Hayek, The Road to Serfdom, 1994)


In 1906, at the height of the Progressive Era, Congress passed the
Pure Food and Drug Act to protect Americans from being poisoned by
tainted or adulterated food.  Following the Elixir Sulfanilamide
tragedy, Congress enacted the Food, Drug, and Cosmetic Act of 1938,
which created the FDA.  Thereafter, in a process that Robert Higgs
calls "punctuated politics" (Introduction, in Higgs, Hazardous to Our
Health?), occasional public health tragedies prompted Congress to
enact quantum enlargements of FDA's powers.  The FDA has creatively
interpreted its powers and aggressively enforced them, creating media
controversies that prompted Congress to enact "clarifying" legislation
that simply codified even broader powers.

Like many other Progressive initiatives (such as the income tax) and
the initiatives of the New Deal to follow, this initiative has gone
badly awry.  The Congress of 1938 would scarcely recognize the system
of centralized health care decision making that the Nation experiences

The principal mandate given the Department of Agriculture in the 1906
legislation was to protect the populace from unsafe food and drugs.
Producers and distributors were required to "brand," or label,
products (such as by identifying ingredients, recommended use and
dosage, and necessary precautions) so that consumers could make
informed choices about their use.  The initial impetus may be seen
as facilitating the operation of the market.

After the 1938 Act, the FDA decided that consumers could not be
trusted to make decisions on their own behalf, and it began its
step-wise journey to the regulatory totalitarianism we see today.
Use of a wide variety of drugs was prohibited except by prescription.
Rigorous and costly testing and approval was required for each new
drug or food additive before it could be marketed, and approval was
limited only to uses for which the drug or additive was tested.
Health claims for unapproved uses were banned, products being sold on
the basis of such claims were seized without just compensation, and
the distributors of the products faced fines and imprisonment.  Toxic
drugs were approved for use in part because information on safer
alternatives was suppressed.  Vitamins, minerals, amino acids,
hormones, herbs, and other health products were seized as unapproved
drugs whenever health claims were made for them.  Importation of
unapproved substances was limited to amounts needed for personal use
or, in the case of possible prescription drugs, prohibited outright.

The FDA surely has protected the American people from poisons, but
in its zeal it has assumed command and control of human health and
nutrition under an oppressive regulatory regime.  It has betrayed
the people it professes to protect.  It has stifled life-saving
information, it has deprived the people of life-saving health products
that have reached the market too late or not at all, it has permitted
them to die unnecessarily from toxic drugs, and it has deprived them
of their livelihoods, property, and freedom of speech.  Can the cure
be called a success when the patient has died?

"Experience should teach us to be most on our guard to protect liberty
when the Government's purposes are beneficent.  Men born to freedom
are naturally alert to repel invasion of their liberty by evil-minded
rulers.  The greatest dangers to liberty lurk in insidious
encroachment by men of zeal, well-meaning but without understanding."
(Justice Louis Brandeis, 1928)

Growth of the Political Market

Regulatory and enforcement power, once granted, tends to continue to
accrue to the regulatory agency.  Furthermore, decisions made under a
regulatory regime quite explicitly benefit certain segments of society
at the expense of others.  These closely related phenomena may be
understood as the operation of a "political market."  In these
respects the FDA is typical.

The principal reason that regulatory power, including FDA's power,
enlarges over time is that the conferral of regulatory power converts
private resources to common property, subjecting them to a political
decision making apparatus.  Resources allocated in the political
market are "up for grabs," with the result that the number of
political interests with a stake proliferates and the politically
powerful prevail where the objectives of the different political
interests are opposed.

Government's two mighty weapons are taxation and regulation.  Taxation
under the threat of imprisonment shifts income from the control of the
individual to the control of politicians and bureaucrats.  Regulation
redirects human action through coercion.  Once the government has
asserted its power in a manner that restricts free decision-making in
the market (either by redistributing income or commandeering private
activity), it displaces the market as the locus of decision-making,
and a political market arises.

In the political market, the relative political power of the affected
interests, including the regulators, the regulated, the purported
beneficiaries of regulation, the taxed, the recipients of subsidies
and largesse, the media, "public interest"groups, and other affected
interests, determines the outcomes of decisions.

On a particular political decision or issue, an interest group whose
vital interests are affected will organize and mobilize its resources
to protect and enlarge those vital interests.  Others whose interests
are less affected will, by comparison, be less well organized, less
mobilized, and less effective with respect to that decision.  In sum,
each special interest struggles to prevail, in the decisions it cares
most about, against the remainder of society.

As more people, groups, and interests discern that they are advantaged
or disadvantaged by decisions in the political market compared to
other groups, they are forced to organize and mobilize to protect
their interests.  Soon, everyone is represented by politically active
interest groups and heavily invested in the outcome of political

"The most cogent reason for restricting the interference of government
is the great evil of adding unnecessarily to its power.  Every
function superadded to those already exercised by the government
causes its influence over hopes and fears to be more widely diffused,
and converts, more and more, the active and ambitious part of the
public into hangers-on of the government, or of some party which aims
at becoming the government." (John Stuart Mill, 1859)

An almost irresistible impetus for the enlargement of taxation and
regulation results from the pressure from all groups in the political
marketplace to enlarge their "take" and to "rig" the rules in their
interest.  In this manner, incredible power is ceded to the political
market through the organization of interest groups, the building of
coalitions, and the enactment of special-interest legislation.  The
political market grows as a cancer on the market economy, individual
choice, and freedom.

Congestion in the Political Market

When decisions relating to the allocation of resources are centralized
in the political market, what Frederic Bastiat calls "legal plunder"
ensues.  The resources fall under the control of the plunderers, who
still face the task of dividing the plunder among themselves.  Since
rules of private property have been suspended in the act of plunder,
what method remains to divide the spoils?  To appease all plunderers,
sometimes the most expedient action is to plunder still more.

In economics terminology, the political market converts resources from
private resources to "common property resources."  A common property
resource is a resource for which no one has an ownership interest that
provides the ability to exclude other users, and as a consequence no
user faces the full cost of his own use.

Because the user does not bear the full cost of his own use, common
property resources are chronically under-priced and over-used.  This
condition, called congestion, corresponds to the condition that faces
plunderers when they face undivided spoils.

Examples of congestion abound.  On a public road, each additional user
creates additional delay for everyone but only experiences his own
delay.  On the public common, grazing is free to the next sheep but
all other sheep have less.  In socialized health care (or socially
insured health care, for that matter), third parties bear most of
the cost of care selected by a practitioner for a patient.  Soon,
respectively, the road is crowded, the common is over-grazed, and
demand for health care strains available resources.  Without the
pricing mechanism to ration use (divide the plunder), the two
remaining responses are to ration use by a non-price mechanism
and to increase supply (plunder).

In the political market, each political interest group, like a sheep
grazing on the common, seeks to maximize its share of the common
property resource.  Together, the proliferating groups exert pressure
in the political market to over-regulate private activities to their
own advantage and to over-tax in order to create expenditures to their
own benefit.  Despite the over-taxation and over-regulation, there
still aren't enough goodies to go around because, of course, the
goodies are simply the resources for which others have worked, and are
virtually free to those who share in the plunder.  The government must
struggle to reconcile the competing demands placed upon it by the
competing groups.  The political process becomes overloaded.  Jonathan
Rausch has called congestion in the political market "demosclerosis."

Abuse of Delegated Power

Under the "rule of law," the government sets the ground rules for
transactions among private parties and between private parties and the
government.  The ground rules are fixed, predictable, and known to all
in advance, and they are applied to all persons equally.  All persons
who behave in a certain way are affected in the same way, and all
persons have the certain knowledge of the standing of that behavior
under the law.  The purpose of these rules is not to displace private
decision making, but to improve its efficiency by reducing sources of
legal and political uncertainty.  A simple example of how the rule of
law might be applied to the safety of foods and pharmaceuticals is
uniform labelling requirements intended to ensure the availability of
information to the consumer.  A second example, with admittedly wider
applicability than to foods and pharmaceuticals, might be a set of
laws governing product liability, including rules of evidence, the
loser-pay principle, damage award limits, and protection for those
who supply materials to manufacturers but who have nothing to do with
actual decisions to market products (more later on this).

Although congestion in the political marketplace is a symptom that too
much power has been ceded to the government at the cost of liberty,
statists see congestion as a problem and claim that delegating power
from the legislative branch to the executive branch is necessary.
In that case, the administrator is faced with making case-by-case
decisions (dividing the plunder).  Whether as a result of legislative
intent that certain politically powerful interests benefit from these
decisions, or as a result of the groups whose interests are affected
strongly by these case-by-case decisions bringing their influence to
bear on decision making, any concern for predictability and equality
under the rule of law is pushed aside by the competition for plundered
resources.  Now the concern of the decision maker, and of affected
interests, is the incidence of effects of the decision -- who benefits
and who loses.  Delegation results in the replacement of the rule of
law by arbitrary rule.

"There is no justification for the belief that, so long as power
is conferred by democratic procedure, it cannot be arbitrary.  If
democracy resolves on a task which necessarily involves the use of
power which cannot be guided by fixed rules, it must become arbitrary
power...By giving the government unlimited powers, the most arbitrary
rule can be made legal; and in this way a democracy may set up the
most complete despotism imaginable." (Hayek)

The Iron Septagon and Regulatory Capture

Milton and Rose Friedman (Free to Choose, 1980) stated, "Force,
introduced for good purposes, will end up in the hands of people who
use it to promote their own interests."  Delegation and the creation
of additional opportunities for plunder in a regime of arbitrary rule
indeed bring this result.

It is natural to assume that a regulatory agency will be captured
by the regulated interests.  However, in the political market, the
participating groups are not limited to the regulated community.  The
regulated community, the fear-mongering public interest groups that
"own" the relevant issues and need continuing contributions, the
perpetual incumbent legislators and their grasping staff, the policy
making elite that seeks to advance its ideological agenda and expand
its perks, the bureaucratic legions funded by the legislators and
seeking to protect their jobs, the morally bankrupt and sensationalist
media, and the public that would trade its freedom for security all
play a role.  The public elects the legislators and contributes to the
public interest groups.  The legislators appease the public and ensure
contributions from the interest groups by empowering the elites, who
in turn collaborate with the media to trump up problems and call for
more regulatory power.  The bureaucrats step out smartly to do the
elites' bidding and win promotions and job security.  The regulated
community finances elections and influences the appointment of elites
and the promulgation of the bureaucrats' regulations.  It's true that
the regulatory agency is captured, but by whom depends on who can
cobble together a legislative and regulatory majority to tyrannize
the minority.

Delegation, arbitrary rule, and the inevitable regulatory
capture results in what James Bovard (Lost Rights, 1994) calls a
"proliferation of petty dictatorships."  In these legislative/
regulatory dictatorships, centralization, coercion, and cartelization
go hand in hand.

Centralization and Coercion

"The statesman who should attempt to direct private people in what
manner they ought to employ their capitals, would not only load
himself with the most unnecessary attention, but assume an authority
which could safely be trusted to no council and senate whatever, and
which would nowhere be so dangerous as in the hands of a man who had
folly and presumption enough to fancy himself fit to exercise it."
(Adam Smith, The Wealth of Nations)

"As the coercive power of the State will alone decide who is to have
what, the only power worth having will be a share in the exercise of
this directing power...The democratic statesman who sets out to plan
economic life will soon be confronted with the alternative of either
assuming dictatorial powers or abandoning his plans...If the State is
precisely to foresee the incidence of its actions, it means that it
must leave those affected no choice...It is impossible for any man to
survey more than a limited field...It is inevitable that [the experts]
should impose their scale of preferences on the community for which
they plan." (Hayek)

"The upshot [with respect to food and drugs]...is a diminished scope
of discretionary individual action: what one previously could choose
to do, one no longer can do; what one previously did not have to do,
one now must do; and everyone must act in the same way...The main
reason why FDA regulation must fail is that the people subject to it
have preferences, social circumstances, and physiological attributes
that vary tremendously among persons and over time and that no central
planner can possibly know or deal with rationally.  For the FDA,
one ruling applies to all cases.  Products are declared 'safe and
effective' or not.  A product is permitted to be sold to everybody or
to nobody.  These dichotomies mock the heterogeneity of actual life.
In reality, a product that is too risky for one person is acceptable
to another; only the users can say...The FDA deserves a failing grade,
because it presumes to exercise control over people's lives that
cannot possibly be justified unless one views people as having no more
rights than the sheep in a flock...The enabling statutes rest on a
paternalistic foundation that is inconsistent with the maximization
of consumer welfare and the preservation of a free society...There
is absolutely no justification for forcing people at gunpoint to do
'what's best for them'...Citizens who value liberty should have no
trouble rejecting a system that simultaneously harms the public health
and deprives the citizens of their ability to make vital choices about
their own health." (Robert Higgs, Introduction, in Higgs, ed.,
Hazardous to Our Health?, 1995)


The original rationale for federal regulation has differed among
industries.  Avowed purposes have varied: to preemptively control
price collusion by oligopolies (say, in transportation); to protect
financial institutions from collapse (say, in banking and securities);
to ensure "fair" access to outputs (say, in electric power or
broadcasting).  With respect to food, drugs, and medical devices, the
rationale since 1938 has been to protect public safety.  In 1962,
a second rationale -- to protect the public from the ineffective
products of "snake oil salesmen" -- was added.

Yet across the board, the petty legislative/regulatory dictatorships
have come to function in a way that maximizes plunder.  Each petty
dictatorship comes to resemble a cartel that controls entry, output,
price, use, or a combination for the benefit of the few.  "The source
of this power over all consumption which in a planned society the
authority would possess would be its control over production...If we
face a monopolist we are at his mercy" (Hayek).  This is true, for
instance, of railroad regulation, airline regulation, and food and
drug regulation.

"Very persuasive evidence exists that railroad regulation in the late
nineteenth century, the nation's first regulatory effort, did not
come about simply because of public outrage at the robber barons, as
is commonly supposed.  It turns out that most railroads supported
regulation in 1887 when Congress created the Interstate Commerce
Commission.  They believed the ICC would help them impose an
industry-wide cartel, something they had not been able to accomplish
by themselves." (Bernard Siegan, Economic Liberties and the
Constitution, 1980)

"The basis of airline regulation is price, entry, and output
control...Three studies assert that regulation substantially elevates
prices and distorts competition and efficiency by causing airlines
to compete on the basis of service rather than price...The most
significant accomplishment [of airline regulation] is the raising of
airline fares." (Siegan)

"The 1962 Kefauver-Harris amendments to the food and drug laws that
required the Food and Drug Administration to regulate efficacy of
pharmaceuticals...have increased the cost of entering the drug market,
prolonged testing, and resulted in less output and higher prices...The
post-1962 flow of new drugs was less than one-half of the pre-1962
flow, without corresponding benefit in the efficacy of the drugs
produced." (Siegan)

"Federal regulation has probably doubled the cost of introducing a
new pharmaceutical...Regulation stemming from the 1962 amendments was
the leading (but not the sole) cause of a sharp decline of new drug
introductions into the United States during contemporary years.  [This
conclusion also is] based on comparing output of pharmaceuticals in
the United States with that of Great Britain between 1962 and 1971."

"The result is impressive: expensive drugs, lack of innovation, no
improvement in drug safety." (C. Frederick Beckner, 1993, The FDA's
War on Drugs, in Georgetown Law Journal 82)

Socialism doesn't work.


Bovard, James, Lost Rights: The Destruction of American Liberty,
St. Martin's Press, New York, 1994.

Hayek, Friedrich A., The Road to Serfdom, University of Chicago Press,
Chicago, 1994.

Higgs, Robert, Editor, Hazardous to Our Health?, The Independent
Institute, Oakland, California, 1995.

Siegan, Bernard H., Economic Liberties and the Constitution,
University of Chicago Press, Chicago, 1980.