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Death to Venus: Who Should Regulate Pornography—Government or Market?

Does the Government Over-Regulate?
Does the Government Over-Regulate?
http://electroniccigaretteglobe.com/electronic-cigarette-regulations/

In Shakespeare’s The Merchant of Venice, Antonio, the titular Venetian merchant, mortgages his pound of flesh to the Jewish moneylender Shylock for 3,000 ducats ($300,000 in today’s money) to fund his impecunious friend Bassanio’s amorous pursuit of Portia, a rich heiress in Belmont. Near the play’s end, when Antonio is unable to pay his debt on time and Shylock is unyielding in his demand for Antonio’s “carrion flesh,” both parties appeal to the Duke, the city’s supreme authority. Sympathetic to Antonio’s plight, the Duke asks Shylock to show mercy. Shylock, a good economist that he is, responds

What judgment shall I dread in doing no wrong?
You have among you many a purchas’d slave,
Which (like your asses, and your dogs and mules)
You use in abject and slavish part,
Because you bought them…
[S]o do I answer you:
The pound of flesh (which I demand of him [Antonio])
Is dearly bought, ‘tis mine and I will have it:
If you deny me, fie upon your law!

Although the Yale literary critic Harold Bloom reminds us that the play simply is a romantic comedy, not as some Marxist critics would have it, an attack on an unjust economic system, it is hard to deny the play’s economic subtext. At issue is whether the market should be so unfettered, so untethered, so free in every respect, that anything and anyone can be bought and sold like a cheap commodity.

Arguments for and against the self-regulation of the adult film industry take a similar form. Who should protect workers’ health – the market or the government?

According to economist Alexander Padilla, adult performers rationally weigh the cost and benefit of withholding their health information from employers and partners. In an industry where disclosure of one’s HIV is career ending, an HIV-positive adult performer will falsify information about his or her health status because the expected benefits of remaining employable outweigh the expected costs.

But withholding information creates the problem of adverse selection for non-HIV adult performers, who are going to be exposed to higher risk of infection. Therefore, to protect their reputation and profits, industry participants agree to coordinate by setting and enforcing strict uniform standards, such as mandatory monthly STD testing for every employee—and all this without government’s unduly and officious meddling.

Although Padilla’s argument for self-regulation does appear to solve the industry’s information and coordination problems, it doesn’t solve the negative externality problem. What the argument fails to address is much more fundamental: Who pays when there is an HIV outbreak? Not the industry, because the question of liability is legally tricky. But if not the industry, then who? In a word: society.

Let’s consider California. According to the state’s department of public health, there are 164,793 reported cases of AIDS between 1983 and 2012.To assist low-income individuals with treatment expenses, the federal and state governments have adopted a number of programs. One such program is the AIDS Drug Assistance Program (ADAP), which in 2012 had a national budget of $2 billion, of which $445 million went to California, or about $2,700 to each HIV-positive Californian. When costs like these are socialized onto the taxpayers who have to subsidize treatments for HIV sufferers, there’s a potential for inefficiency due to negative externality.

For all its virtues—and there are attractive ones—a policy of self-regulation in the adult film industry is in the final analysis problematic: society ultimately has to pay the long-term cost of HIV/AIDS care for infected adult performers. Short of outright regulation, policymakers should strike a balance, a delicate one to be sure, between necessary interference and free enterprise.