The idea is to ensure that benefits “justify” (alas, not as strong as “exceed”) costs, and to emphasize the “least burdensome” means for achieving regulatory ends.
Regulations cost more than a trillion dollars annually, according to the Small Business Administration, although Mr. Sunstein’s OMB and others object to the claim.
Moreover, OMB owns up to some $5 billion in new annual costs in its yearly reports. So the Obama order at best might kind of freeze things, generously interpreted, but not shave over-regulation aggressively. This administration sees regulation as a funamental good, and has no real agenda for pruning it.
Thus, such rules can skate past initial intense review, and the kind of future lookback that might apply to them via the new Obama order.
As we show in the new “Ten Thousand Commandments,” the number of rules in the pipeline at agencies is mounting. Major rules, those expected to cost over $100 million annually (and acknowledged; we just noted many are not), have experienced a particularly strong surge. Indeed, just to get where we were a year ago, many rules would have to be cut.
Over at Space Politics, Jeff Foust reports that the House has passed a bill allowing the administration to remove satellites from the munitions list and move control of their export from the State Department to the Department of Commerce. The current situation has cost our launch and satellite industry billions in lost international sales, which could have helped quite a bit with the trade balance since it went into effect fourteen years ago. Unfortunately, there is no companion in the Senate. As Foust notes, such a measure has passed the House before (three years ago) only to die in the upper chamber, but since the recent report put out by the Aerospace Industries Association documenting the damage to the aerospace industry (about $21B), there is probably more awareness of the issue on the Hill than there used to be, so there’s some reason to hope.
If you believe the U.S. Environmental Protection Agency, its Design for the Environment (DfE) program is an example of a voluntary effort to protect the environment. In reality, it’s nothing less than a tool designed strong-arm industry into abandoning useful products.
The program calls on companies to eliminate certain chemicals from their products voluntarily, largely based on hazard rather than actual risk.
The crux of the problem is the focus on “hazard,” which simply represents the potential for danger given specific circumstances and/or exposures. \For example, water is hazardous because excessive consumption can produce fatal “water intoxification” or hyponatraemia. But we don’t need to “voluntarily” take it off the market.
Currently, the agency is using the DfE program to strong-arm the laundry industry to stop using detergents that include a certain class of chemicals — Nonylphenol Ethoxylate (NPE) surfactants — although there has been no proper risk assessment process that would justify regulations under the Toxic Substances Control Act (TSCA). Meanwhile, the producers of these chemicals are up in arms as they see their market disappear without justification or due process.
The trade association representing these chemical makers and some users — the Alkylphenols & Ethoxylates Research Council – complained about this effort in a May 10 press statement. It noted that EPA’s review of the issue under the DfE program “represents at best a simplistic hazard-based review that will not ensure that products formulated with the alternative surfactants will be safer or pose a lesser risk to human health or the environment.”
Yet EPA can get away without proper reviews and standards because, after all, the program is “voluntary!” Well, apparently not for everyone.
This morning on C-SPAN’s “Washington Journal,” House Transportation and Infrastructure Committee Ranking Member Nick Rahall (D-W.V.) was read a passage from a blog post I wrote last month in which I blasted the Senate’s Moving Ahead for Progress in the 21st Century Act (MAP-21). While declaring my claim that the smoke-and-mirrors funding provisions contained in MAP-21 are extremely worrisome “may or may not be true,” he referred to the same provisions as “sleight of hands” (sic). However, he insisted “it is paid for” a number of times during the interview.
Unfortunately for Rep. Rahall, he seems to have missed my entire point. The sleights of hand he refers to are “fiscal gimmickry” because the reality of them panning out as planned is far from certain. Not only, as I have noted in the past, does the Senate’s 15-month reauthorization rely on 10 years of one-shot revenue to make it work, the largest single general revenue offset is extremely suspect.
This provision rejiggers pension actuarial tables, calling it “pension funding stabilization,” and claims a $9.5-billion offset over 10 years (compare this to the $109 in total funding). The 42 pages of the over-1,600 total pages in MAP-21 that cover this are so opaque that no one clearly understands how this money will materialize. But according to federal transportation legislative expert and former Hill staffer Gary Hoitsma, “[S]ome believe that money taken now from traditional pension retirement plans in this manner will itself ultimately have to be repaid later, very likely through a future taxpayer bailout.” That is hardly confidence-inducing, Rep. Rahall. And it’s only the most sketchy of the sketchy pay-fors contained in the bill.
CEI General Counsel Sam Kazman about to take a spin in the Google car. (Photo by Marc Scribner)
This morning, CEI’s resident transportation policy junkies — General Counsel Sam Kazman and myself — had the opportunity to test-ride Google’s prototype self-driving car in downtown Washington, D.C. In October 2010, I wrote about the Google driverless car’s feat of secretly logging 140,000 miles on U.S. public roads without a single accident. Sam and I were able to ask questions about the car’s features, practical traffic concerns, and the future implications of driverless automobiles with respect to crash reduction, congestion mitigation, and air quality improvement.
Google’s car uses a wide variety of sensors that detect pedestrians, objects, and infrastructure in real time. It is the sustained rapid collection of conditions data that allows the car to slow or stop suddenly if a pedestrian enters the street, a car suddenly changes lanes or pulls away from the curb, or a lane is closed for construction or an event. It was quite impressive to see all of this happen right before our eyes.
Of course, there are still kinks to be worked out. Most small debris, say paper or a plastic bag, would not erroneously be detected as a collision threat by the Google car’s forward-mounted radar. But small metallic objects, say a discarded can of soda, potentially have a radar cross-section large enough to trigger a crash-avoidance response. This is a problem, but one Google’s engineers hope to solve in the coming years.
But these slight technical glitches should not overshadow the monumental progress robotic cars represent. Given that a computer is far more precise and subject to far fewer potential errors than a human, accident rates will plummet when these vehicles become available to consumers. While fatal crash rates have been falling thanks to improved technology (due to both vehicle and infrastructure safety improvements), the crash reductions that would result from adopting driverless technology would make past progress seem like a drop in the bucket.
Those with an interest in conserving our oceans’ fish stocks and those with an interest in promoting private property should both be interested in my latest short study at CEI, “Give a Man a Fish.” Here’s the introduction:
Some policy makers and environmental advocacy groups are beginning to realize that the solution lies not in further government regulation, but in investing fishermen with property rights. However, government bureaucrats are also attempting to utilize this insight to gain even more power over fisheries, threatening to derail the momentum toward a more rational allocation of ocean resources. That would be bad news for both fish populations and the people who depend on them for their livelihood.
The oceans are an important source of food and income for people around the world. In 2007, proteins from fish accounted for 15.7 percent of the total global animal protein supply. In 2008, an estimated 44.9 million people were directly engaged in the fishing industry (both marine capture and aquaculture). However, the world’s fish stocks are not limitless, and are being depleted rapidly.
Two principal factors are at work. First, the billions of dollars in subsidies bestowed on the fishing industry by many governments makes overfishing profitable, even as per capita fishing yields decline. Second, the absence of property rights over fish in most countries means that there is no incentive for any party to husband this resource. In fact, the absence of property rights, combined with subsidies, creates a perverse incentive to deplete this scarce resource.
Attempts to prevent overfishing by promulgating regulations (which are often at odds with subsidies) have proved both ineffective and impossible to enforce. As long as the incentives are skewed by bad government policy, many fishermen will continue to work around regulations or simply neglect to report some of their catches—a practice known as “black” fishing that is all too prevalent. Ending subsidies and extending genuine property rights to fisheries will help solve these problems.
Thanks are due to my co-author, Roger Abbott, who provided much of the initial research effort, and to Michael DeAlessi, who wrote the definitive free market work on privatizing fish stocks, Fishing For Solutions, in 2003.
“How could it be illegal to sell something that it’s perfectly legal to give away?”
– George Carlin
The recent extra-curricular exploits of American Secret Service agents in Columbia have once again brought the World’s Oldest Profession into the news. And once again, both opponents and proponents of legalized prostitution are making their respective cases in a variety of public fora.
The “con” arguments on legalized prostitution are many, but essentially break down into two types. 1) Moral: Selling the body for sex is an inherently debased and debasing activity that governments should restrict in order to protect the character of society, and 2) Practical: Prostitution breeds a variety of pathologies — disease, violence, etc. — that it is the duty of the state to guard against.
Unfortunately, as with laws against narcotics, prostitution prohibition laws often have the opposite effect than intended. In practice, anti-hooking laws end up hurting the very people they are designed to protect, while compromising the moral integrity of the government by entangling it in a hopeless morass of inconsistent logic, ensuring inconsistent enforcement and therefore unjust governance.
Let us start with a simple fact. A lamentable one, perhaps, but a fact nonetheless: There is always a market for sex. And by market I mean a literal, economic market. In fact, it is the one market you can be sure will always exist — prostitution in one form or another is found in virtually all known human societies, past and present. This has to do, ultimately, with the nature of the male sex drive, which has been underwritten by millions of years of evolution and cannot be legislated out of existence, and the relative reticence with which human females choose their mating partners.
HARLAN J. PROTASS: “The Criminal Crackdown on Insider Trading Is Stupid” “Pouring money into criminal insider trading cases is a huge waste of public resources. There is a much more cost-effective way to go after this particular form of fraud, and switching to it would free up prosecutorial resources to fight other economic crimes that pose a far greater danger to Main Street investors. [...] The government has at its disposal alternative methods for going after traders on insider information—civil charges that generate pocket-book penalties instead of criminal ones that lead to prison sentences. Civil charges are more proportional to the wrongdoing, less expensive to prosecute, and still get the job done.”
JUDITH WARNER: “Blaming Brain Science” “Is understanding human behavior as being driven, at least in part, by neurobiology, tantamount to ‘blaming the brain’? Does talk about genes, and brain structure and chemistry relieve us of personal responsibility for our actions, reinforcing a kind of hopeless fatalism, and allowing us such easy excuses for our bad behavior as – to borrow the headline from a New York Times opinion piece last weekend—’The Amygdala Made Me Do It’?”
INVESTOR’S BUSINESS DAILY EDITORIAL: “Obama Wages War on Capitalism” In the summer of 2009, the federal government gave General Motors $49.5 billion in aid, including a $6.7 billion loan, to finance its bankruptcy. The result: Washington, not private shareholders, took roughly 61% ownership of GM. The bailout wasn’t to save capitalism; it was a payback to the United Auto Workers union that gave Obama and his party more than $4 million. [...] Obama has continued his capitalism-wrecking, union-favoring campaign by naming members to the National Labor Relations Board who tried to block Boeing from opening a plant in South Carolina to build the company’s 787 Dreamliner.”
Early large-scale human migration is the story of dispersal, spreading out as resources were used up and populations expanded past sustainability. The Agricultural Revolution brought greater inter-community trade and migration, including significant migration from rural areas to cities. Empires created the most widespread intercultural migration yet, but it wasn’t until the Age of Exploration that migration and trade increased dramatically. Falling travel costs brought millions of (mostly free) migrants to the New World and other European colonies for employment. Economic liberalism reinforced this trend toward globalization, but world war, nationalism, and more effective bureaucratic states ended this free system.
Humanity’s great migration began in Africa around 80,000 years ago when the human population seems to have dwindled to a few thousand. Richard Klein—author of The Human Career—has argued that genetic mutations in this small population gave rise to abstract thought and perhaps other capacities that led to rapid growth thereafter. In any case, the human population quickly expanded beyond the savannahs of eastern and southern Africa to the northern savannah between Ethiopia and Senegal.
Around 60,000 years ago, humans crossed the strait of Bab el Mandeb into Arabia, and they “quickly” dispersed along the coasts, and by 40,000 years ago, humans lived along the coasts from West Africa to Australia (the first movement out of the tropics). After Australia, people moved into colder climates in Eurasia and China. By 20,000 years ago, people had entered North America, and by 10,000 years ago, migrants lived on every continent in the world, except Antarctica. Although long-distance, cross-culture trade began as far back as 40,000 years ago—based on seashell jewelry found far inland and stone tools constructed from nonlocal materials—most inter-community migration was local, the most important being migrant brides who transferred customs between tribes.
The Agricultural Revolution saw these divergent communities begin to reconnect. The Revolution was brought on by the end of an ice age and a warmer, but more volatile climate. Sedentary communities began to appear and gradually adopt agriculture. Urbanization created epidemics that wiped out huge portions of the Sumerian working population, only to be replaced by Akkadians from rural areas. So great was this rural to city migration that Akkadian became the official language of the empire. As trade between communities increased, immigration also increased. Clay tablets, for example, record that Assyrian traders had established commercial communities in modern Turkey by 2000 BCE. At the same time, large-scale trade networks emerged from Mesopotamia to Asia Minor.
Whether or not a retail investor buys shares of Facebook when it finally goes public tomorrow — and OpenMarket provides public policy, rather than investment, advice — the company’s rise is something to celebrate. The firm’s ascent is a tribute to brilliant and driven entrepreneurs like Mark Zuckerberg, far-sighted venture capitalists like Peter Thiel, and (what’s left of) America’s free-market system and creative destruction.
Yet the lengthy process leading up to Facebook’s initial public offering (IPO) – and the fact that it is going public only after becoming one of America’s biggest companies — illustrates how over-regulation of the stock market through laws like Sarbanes-Oxley and Dodd-Frank has made it harder for investors to grow wealthy with emerging growth firms. These regulatory barriers on smaller and younger companies have also been fingered by a wide range of experts, including those at the respected Kauffman Foundation and on President Obama’s Council on Jobs and Competitiveness (on which Facebook Chief Operating Officer Sheryl Sandberg serves), as slowing job growth and the overall economic recovery.
After the JPMorgan Chase loss of $2 billion, the Beltway elites are painting any criticism of financial regulation as siding with the “big banks.” But the fact is that Jamie Dimon and Chase were going strong after Sarbanes-Oxley was signed by George W. Bush in 2002 and after Dodd-Frank was signed by Obama in 2010. It’s smaller firms and smaller investors who have been the most burdened by these costly and complex rules.
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