An economist I am not. But my earlier toilet post caused me to stumble upon something that challenges my libertarian (Misian) view that government intervention is always a force of economic stagnation, and therefore never a force for economic growth.
On to my unsettling discovery. Initially, I found that, yes, the 1994 law mandating 1.6 gallon toilets did cause quite a commotion, and it did cause a black market in older style toilets that worked. The first 1.6 gallon toilets were terrible, because no thought went into making them work properly. All that happened was that the toilet manufacturers made the tank smaller, and left everything else the same. Thus, the typical ballcock flushing mechanism that worked fine with a 3.5 gallon toilet worked only half as well with a smaller volume of water, meaning that toilets often had to be flushed two or three times, or worse, plunged manually.
With a litany of complaints from consumers, innumerable anti-big-government toilet jokes on talk radio, a “keep the government out of my bathroom” movement was born, and a bill was introduced to deregulate toilets.
Guess whose opposition to the bill killed it?
The environmentalists? No way — not in a Republican Congress.
It was the toilet manufacturers themselves. It turned out that they’d done pretty well under the new laws prohibiting the older toilets.
This led me to wonder about how many economic opportunities are direct and indirect result of government regulations. If you’re a toilet manufacturer, you know that there are only so many toilets in this country, and that while the metal or plastic parts may need to be renewed from time to time, most toilets continue to stay bolted to the floor for many, many years.
Who the hell wants to tear out a toilet unless he really has to? But with the government creating a “has to,” that changes everything. Suddenly, the industry woke up and realized that almost every home had an “outmoded” and now illegal toilet. That’s many millions of toilets that need to be replaced, with much more expensive alternatives.
In short, such government regulation becomes a manufacturer’s dream.
(Libertarians like me object of course. But we’re living back in the pre-9/11 Reagan Era.)
Ditto for the window industry. Anyone in the construction business will tell you about the new double pane window requirements for new construction. But now the rules are changing to require even old windows to be upgraded to the double pane variety.
That’s millions of windows. Who wouldn’t want to be a window manufacturer?
I’m sure there are innumerable examples. Take the disabilty-related rules and regs. One Microsoft executive wrote a piece titled “FEDERAL REGULATION CREATES ECONOMIC INCENTIVES FOR COMPETITION, INNOVATION AMONG TECHNOLOGY COMPANIES” which argued that such regulations create innumerable business opportunities for the high tech community. (Especially for large established companies like Microsoft. Rules like this help insure that its Windows will never be in the toilet.)
I’m sure other examples abound.
How about SUVs? A major reason they’re so popular is that child seat laws make it impossible to use a passenger car to transport more than two kids.
Is government regulation good for the economy? I’ll always be a diehard libertarian in my thinking, but playing Devil’s Advocate occasionally is a good way to flush my soul.
MORE: The comments to this post have reminded me of Bill Clinton’s remarks in Canada that adopting the Kyoto regulations would create economic opportunities.

Montreal ? Former President Clinton told a global audience of diplomats, environmentalists and others Friday that the Bush administration is ?flat wrong? in claiming that reducing greenhouse-gas emissions to fight global warming would damage the U.S. economy.
With a ?serious disciplined effort? to develop energy-saving technology, he said, ?we could meet and surpass the Kyoto targets in a way that would strengthen and not weaken our economies.?
Clinton, a champion of the Kyoto Protocol, the existing emissions-controls agreement opposed by the Bush administration, spoke in the final hours of a two-week U.N. climate conference at which Washington has come under criticism for its stand.

Here here!
And here’s the picture of Bill Clinton at the conference, next to Canadian Prime Minister Paul Martin:


Considering the recent Canadian election results, doesn’t that picture seem to cry out for a caption?