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The Price of Regulation

The Mercatus Center has a new study out claiming that regulations are enacting an enormous toll on our economy.

Economic growth in the United States has, on average, been slowed by 0.8 percent per year since 1980 owing to the cumulative effects of regulation:

If regulation had been held constant at levels observed in 1980, the US economy would have been about 25 percent larger than it actually was as of 2012.

This means that in 2012, the economy was $4 trillion smaller than it would have been in the absence of regulatory growth since 1980.

This amounts to a loss of approximately $13,000 per capita, a significant amount of money for most American workers.

Caveats first: it is possible, even likely, that Mercatus is significantly overestimating the impact of regulations. The reason is that their analysis is cumulative. They find that regulations knock 0.8% off our economic growth every year. Well, if you multiply that exponentially over 32 years, you get a huge amount. Their study only goes back to 1980. So … if they extended it back to 1950, how much would they say regulations are costing us? I addressed this before when some numbnuts said our economy would be four times bigger without regulation. When you play with exponential numbers, you get big results.

Moreover, regulations have an economic benefit, as Ron Bailey notes:

According to agency calculations, American families would see up to $7 in health benefits for every dollar invested through the Clean Power Plan. By lowering particulate, ozone, and nitrogen oxide pollution, the EPA argues, Americans will gain the health equivalent of $55 to $93 billion annually; the yearly costs will be only $7.3 billion to $8.8 billion by 2030.

Garbow added that EPA regs don’t just stop harms but spur technological innovation. He specifically cited regulations that support the deployment of renewable energy supplies, and he pointed out that there are now more jobs in the solar power industry than there are in coal mining.

Those caveats having been made, however, I think Mercatus is probably in the ballpark or at least in the parking lot. Other estimates have generally been in the 10-20% range and I don’t think anyone would argue that regulations have no cost on our economy. Even if Mercatus has overestimated the impact of regulations by 100%, that would still be a 10% hit on the economy and $5,000 out of each our pockets.

Moreover, as Bailey notes, the supposed benefits of regulations are probably overestimates themselves. Many are based on past regulations when we did think like stopping companies from dumping toxic chemicals in water or belching smog into our neighborhoods. But there is a huge difference between reducing smog to very low levels and reducing it to zero. The former has huge health benefits and low cost. The latter has high cost and low benefits.

Most importantly, as Megan McArdle argues, regulations do not exist in a vacuum. They exist on top of and beside existing regulations.

“In one year,” wrote Warren Meyer in 2015, “I literally spent more personal time on compliance with a single regulatory issue — implementing increasingly detailed and draconian procedures so I could prove to the State of California that my employees were not working over their 30-minute lunch breaks — than I did thinking about expanding the business or getting new contracts.”

I know what you’re going to say: Employees should have lunch breaks! My answer is “Yes, but.…” Yes, but putting the government in charge of ensuring that they get them, and forcing companies to document their compliance, has real costs. They add up.

An economy with but one regulation — employees must be allowed a 30-minute lunch break, and each company has to document that it has been taken — would probably not find this much of a drag on growth. But multiply those regulations by thousands, by millions, and you start to have a problem.

(Meyer runs the oustanding Coyote Blog where he opines on economics, business and climate science. Those of who are in the climate skeptic camp could find a lot in his recent series on global warming, where he argues for the “lukewarmer” position. More germane to this, you should read his recent post about the Lilly Ledbetter Fair Pay Act and the massive amount of paperwork it is imposing on businesses so that lawyers can file lawsuits we can achieve pay equality.)

One regulation on pollution is not a big deal. But the cumulative weight is crushing, especially on small businesses. Over the last decade, through Bush II and Obama, we have seen a steep decline in new business and IPOs. A huge number of businessmen and economists think is because of over-regulation (particularly the Sarbanes-Oxley law). Maybe the EPA is right about the economic benefits of those regulations. But even if they are, those regulations are on top of a million others, eradicating most of the supposed benefits. Taking away ten hours of a businessman’s time is nothing … unless you’ve already regulated him so badly he only had ten hours left to expand his business.

Look, no one opposes all regulation. We don’t want to go back the days when we had lead in our water, air and food. But we have long passed the point of diminishing returns. And it’s holding back our economy in a big way. McArdle again:

All of these costs have to be carefully weighed against the benefits of regulations — and not just on a regulation-by-regulation basis, as is currently done, if such cost-benefit analysis is done at all. Each hour of a firm’s time that is sucked up by compliance is an hour that is not spent growing the firm, improving the product, better serving the customer. And as the number of the hours so spent increases, and the number of precious hours spent on growth and operations shrinks, each added hour we take is more costly to both the business and to the rest of us. With labor markets lackluster and growth underwhelming, that’s a cost that none of us can well afford.

To be fair, a huge part of the problem is state and local regulation. That needs to be addressed on a state-by-state basis. But the Federal government could set the tone quite easily. The GOP Congress could pass a law that:

  • Puts a two-year moratorium on new federal regulations.
  • Mandates agency-level review of each and every regulation on the books (which might have the side benefit of actually documenting in one place how many regulations we have — no one actually knows).
  • After two years, only re-enables regulations that the agencies have documented are critical to a clean environment or worker safety or some other concrete goal.

They could set a broad goal of cutting the number of regulations in half. And then dare Obama (or Clinton) to veto it.

The biggest problem with our government right now is that our leaders are asleep at the wheel. They have let regulations, tax codes and spending grow without real supervision. That can work fine for a few years. But eventually, the clinking, clattering, cacophony of caliginous cogs and camshafts that is government starts grinding the country to a halt. Periodically, you have to take a hatchet to the regulations if the country is to function. It’s been 23 years since we did that. We are long overdue.

Cruz-Fiorina 2020

This smacks of desperation:

Ted Cruz formally named Carly Fiorina as his vice presidential running mate Wednesday — a last-ditch move to regain momentum after being mathematically eliminated from winning the GOP presidential nomination outright.

“After a great deal of consideration and prayer, I have come to the conclusion that if I am nominated to be president of the United States that I will run on a ticket with my vice presidential nominee Carly Fiorina,” Cruz said during a rally in Indianapolis.

Fiorina joined the Texas senator on stage, and Cruz’s staff changed the podium in between Cruz and Fiorina’s remarks to display a new logo featuring both their names.

Indiana and California are the last chance for Cruz to derail Trump. I’m guessing he thinks Fiorina will boost him in California. I’m also guessing he’s wrong. No one ever voted for a President based on his Vice President. In fact, given some of the hamsters we’ve had as Vice Presidential nominees — Palin, Gore, Quayle, Mondale, Agnew — I’d say the running mate is almost irrelevant to a candidate’s prospects.

End Game

Last night came very close to ending the Presidential primaries. Trump won all five primaries by decisive margins, outpacing Cruz and Kasich combined by over 300,000 votes and taking, according to one analysis, 110 of the 118 delegates. Barring a complete collapse in Indiana and California, he is likely not only to have a plurality of delegates but a majority. The hopes of a contested convention would appear dashed.

This was obvious to me a while ago when Paul Ryan took himself out of the running for a contested convention. It would have been political suicide for him to offer himself as a candidate if Trump won. I think that Ryan, being one of the smartest people in politics, saw the writing on the wall and wanted no part of that. I also think this is why Christie and others have been flocking to Trump since this election season has shown that a) endorsements don’t ultimately make a difference in the outcome; b) endorsements do make a difference in cozying up to the nominee. And, the more I think about it, the more I think Cruz and Kasich saw this as well. The last few weeks, it has seemed more like they are running for 2020 than 2016.

So this is it. Trump 2016. Despite a media insistence that it wouldn’t happen, despite an onslaught of opposition, despite constant “gaffes”. I think we can finally retire the notion that media elites know what they’re talking about.

I don’t expect this will go well. Trump might win. His opponent is Hillary, after all. But the possibility of an electoral massacre looms large. Trump is trying to pivot to the center but I don’t see that working for two reasons: Trump can’t keep his damned mouth shut; Trump is already well-known. This isn’t like Romney where he could rebuild his image to a public that hadn’t been paying attention.

There will be a lot of post mortems and I’m sure the media will find a way to blame it on Southerners or something. But make no mistake: Trump won almost everyone in the GOP tent. He won the supposedly more intelligent and urbane East Coast elites by massive margins. The only people who opposed him were midwesterners and Mormons, the latter of whom overwhelmingly rejected him. So I don’t want to hear any more crap about the supposed intellectual deficiencies of people in flyover country or the supposed craziness of Mormons. They were the only ones who kept their wits about them.

Clinton won four of five states, increasing her delegate lead to the point of being insurmountable. I’m sure there will be a lot of post mortems of the Sanders campaign, too. My take? Well, Sanders did way better than anyone expected, mostly because people don’t like Hillary Clinton. But, in the end, Clinton had too many advantages: heavy support among blacks, backing of the party elites, support from unions and special interests, name recognition. Moreover, as the campaign went on, Sanders was exposed as a guy who was long on rhetoric and short on policy detail. His foreign policy credentials didn’t exist. His plan to pay for all his new spending didn’t work. His answers to detailed questions got increasingly evasive. You can only go so far with huge glittering promises of free shit.

So here we are: the contest no one wanted. Clinton v. Trump in the contest to see who the voters dislike more. If the Libertarian Party can’t get a significant part of the vote this year …

Bernie to the Left of Sweden

Reason ran a great article this week, pointing out again that Bernie Sanders idea that we should be more like Sweden ignores the reality of Sweden is like these days:

Bernie Sanders thinks the U.S. should look to Sweden and other Scandinavian countries to “learn what they have accomplished for their working people.” The Vermont senator has said so repeatedly throughout his campaign for the Democratic presidential nomination, prompting GOP rival Marco Rubio to say, “I think Bernie Sanders is a good candidate for president—of Sweden.”

This reality will not endear my home country to American socialists, but it’s better to be hated for the right reasons than to be loved for the wrong ones, as the saying goes. Being more like modern Sweden actually means deregulation, free trade, a national school voucher system, partially privatized pensions, no property tax, no inheritance tax, and much lower corporate taxes. Sorry to burst your bubble, Bernie.

Sanders ideas of … really, everything … seem not to have moved much from the 1960’s ground in which they were sewed. Nowhere is this more pronounced than on economic policy. He still thinks of the Scandinavian countries as bastions of socialism when all of them have moved in a decidedly laissez faire direction over the last twenty years: smaller government, free trade and economic deregulation. They are still way more socialist than the United States. But all rank as “mostly free” in the Heritage Foundation’s economic freedom, with Denmark having occasionally ranked as more free than the United States. All of them rank ahead of us on Cato’s Human Freedom Index by dint of having more personal freedom and comparable economic freedom.

I think a large part of Bernie’s success so far has been that he’s not Clinton. The party elite and the Clintons themselves went to great efforts to preclude an alternative to Clinton this year (even, some conspiracy theorists think, to the point of encouraging Trump to run). Sanders, however, is not a Democrat and is not controlled by them. So he ran a real campaign and not a token one. The result has been a surge of support because his earnestness is so refreshing by comparison to Clinton’s deviousness.

I also think a large part, however, was the novelty. It’s been a while since an avowed socialist was on the political scene and I think that appealed to a lot of Democrats. However, Bernie’s ideas are as outdated now as they were when Bill Clinton reformed the Democratic Party back in ’92. And polls have shown that support for Bernie’s ideas evaporate when people become aware of how much they will cost (as the Sweden article notes, you can’t fund a welfare state entirely on the backs of the rich).

That’s why I think Clinton will still win this thing. As the hope of spring turns into the realities of summer/fall, people will remember why we don’t elect honest-to-God socialists in this country. And they will turn away from the junk food that is Sanders to the broccoli that is Clinton.

Innocence is Not Proof of Innocence

Another big week, but I thought I’d put this up. How bad has our college kangaroo court system gotten? You can now be effectively expelled for rape when the supposed victim says she wasn’t raped. At all. As long as someone at some point thinks the sex was non-consensual, it’s fair game.

The good news is that the student is fighting back and is suing the Office of Civil Rights itself for demanding that college water down their judicial systems like this.

The Cruelty of the $15 Minimum Wage

Reason posted this over the weekend. It’s a good review of why the $15 minimum wage, which Clinton has now embraced, is insanity.

Boudreaux gets into an aspect of the wage hike I didn’t: that he thinks the gradual increase is designed to conceal the effects. If the economy does well for other reasons, the Democrats will then claim the $15 minimum wage is having no effect on jobs.

Here’s the thing: the Democrats are claiming, based on a grand total of one study that doesn’t say what they think it says, that we can raise the minimum wage without increasing unemployment. Let’s pretend that this point is up for debate and that we are, in effect, engaging in a massive gamble on the laws of economics. What is the downside risk if they’re wrong?

As I noted in my last post, long-term unemployment is one of the most damaging things that can happen to someone. It can repress earnings for a lifetime, it can affect health and happiness and, as we’ve seen in Europe, masses of unemployed young men can become a hotbed of crime and extremism. That’s the risk if they’re wrong.

The Democrats are gambling the futures of millions of people on this will-o-the-wisp idea that the Law of Supply and Demand is magically suspend for labor because … well, because the unions want it to be. If they’ve gambled wrong, they won’t be paying the price. Millions of poor people and minorities will. If the $15 wage causes mass unemployment, the effects will last for generations. It may not be reparable in our lifetime.

I’m glad the Democrats have a few pet economists who will tell them this is a low-risk bet. But it’s yet another illustration of how the Democrats “help” people by holding their heads underwater. I have no doubt that they think they are being compassionate. But gambling someone’s life on crackpot economic ideas is not compassion.

Democratic Debate #425

Here’s the wonderful thing about Democratic Part debates. Any time I even entertain the notion of voting for a Democrat, all I have to do is watch them debate and I am instantly dissuaded. Bernie Sanders and Hillary Clinton debated again last night. I don’t know (or care) who the winner was. I know who the loser was: anything approaching sanity.

Here is a short list of the things the candidates basically agree on:

  • We should address global warming. But in doing so, we should abandon the technologies that have made the most progress in reducing greenhouse gas emissions: nuclear power and fracking.
  • Government should spend yet more money making college more expensive. I mean, cheaper, definitely cheaper.
  • We shouldn’t reign in exploding retirements. We should expand them. And we can pay for that with taxes on the rich.
  • We need way more liberals on the Supreme Court.
  • Any SCOTUS opinions liberals like is “established law” and should not be touched. Anything they don’t like, such as Citizens United should be overturned.
  • We need a $15 national minimum wage.
  • Boy, do we need to spend more money. For jobs and stuff.

There is some daylight between the candidates. Clinton is more of an interventionist abroad while Sanders is more isolationist. Clinton is also a bit more hostile to civil liberties. And, to be fair, Clinton has frequently taken the opposite opinion on the minimum wage and fracking. But it was kind of scary listening to these chowderheads last night and imaging what they might do with a Democratic Congress.

On style, Sanders won. But, were I a Democrat, I would probably be voting Clinton. Sanders has the big ideas and high-sounding rhetoric. But Clinton is the one who could actually get things done. If I were a Republican, I’d probably want Sanders since even a Democratic Congress wouldn’t do all the crap he wants.

The more I turn this over, the more I think retaining Congress has to be the priority for the GOP. I’ve basically given up the White House for lost this year. I think Clinton is going to win the nomination and the election, despite her high negatives and ethical problems. I base this partly on intuition. In every election since 1980, I’ve gotten a feeling for who was going to win. It has rarely failed me. The only time I was even uncertain was 2000. I’m now getting that feeling about Clinton. I see her on TV and think, “Jesus, we’re actually going to do this thing, aren’t we?”

But I also base on the GOP, which is either going to nominate Trump or nominate someone else to lead a badly fractured party. I’m hoping it’s Cruz, since he will probably lose but would at least bring enough voters to the polls to hold Congress. But if Trump is the nominee …

This is a bad year. I’ve been watching politics since 1980. I’ve been blogging about it, off and on, for the last 15 years. I’ve never seen anything like this. Even Gore and Obama had their redeeming features. Even Bush and Dole had reasons to vote for them. I look at this field — a socialist, a criminal, a fascist and a twerp — and all I can think is, “please, someone else.”

The Anti-Gun Arguments Get Stupider

I’ve been pro-second amendment as long as I can remember. My dad owned guns. Most of the people I knew growing up either owned a gun or hunted. I try to engage the anti-gun arguments but I know I come at it from a bias: it didn’t occur to me until a relatively late age that there were people who wanted to rid our society of guns.

But as Americans continues to stock up on guns and gun violence continues to fall, the arguments of the anti-gun crowd are getting weaker and weaker. Samanatha Bee ran a bit on her show, demonstrating — to our supposed horror — that it’s easier to get a gun than to obtain a NRA mascot costume (although they didn’t actually buy any guns). Charles Cooke:

There are disagreements in politics. And then there is willful stupidity. This, alas, is an example of the latter. “Eddie the Eagle” is a private, trademarked, fictional character owned by an organization that is able to restrict his replication as much as it wishes. Firearms, by contrast, are constitutionally protected goods that cannot be denied to free people without good cause. Of course it is easier to get hold of one than the other. To buy a gun one needs to be of a certain age and to be without a criminal record; to obtain an “Eddie the Eagle” costume one needs to meet whatever conditions the character’s owners have imposed. One might as well ask why it is easier for a person to buy a machete than to take Jennifer Lawrence out for dinner. “But one is nicer than the other; surely that counts for something?!”

You can imagine, of course, how the Left Wing idiots praising Bee’s skit would react if Glenn Beck showed it was easier to get an abortion than to adopt a child. Some things are harder to do than others. This does not convey any kind of social commentary.

It is notable that when Bee finally compares like with like — that is, when both of the products within her comparison are available on the open market — she has to resort to debunked lies. “It turned out the organization that makes it easier to get a gun than Sudafed . . .” Bee claims at one point. This is false. In truth, both guns and Sudafed are regulated in all 50 states when they are purchased from a professional dealer. Moreover, as anybody who has bought both knows, it is infinitely easier to buy Sudafed from a pharmacy than to buy a gun from a dealer, and easier, too, to buy Sudafed from a secondary seller than it is to buy a gun privately.

I haven’t watched Bee’s show because I don’t watch much TV. I liked her on The Daily Show but the clips that show up in my social media are of a piece with this: condescending, incorrect and more smarmy than they are insightful. And liberals seem to love it. She had a recent bit responding to Rubio’s comment that some Democrats support abortion up until birth, saying, “Removing the baby on the due date isn’t an abortion, it’s a cesarean.” No, it isn’t.

The diaspora of Daily Show correspondents has been a mixed bag. John Oliver’s show is pretty good (and tackles issues that are in the libertarian wheelhouse, like asset forfeiture). Colbert’s show is OK. Whitmore’s show is OK at times. Bee’s show, from what little I’ve seen, mainly appeals to liberals who want more sass than fact. The Daily Show itself is struggling. Trevor Noah isn’t a bad host but he lacks Stuarts’ skill in making both sides laugh.

Well … it could be worse. We could be seeing this bullshit from a “real” news organization.

Update: A lot of the anti-gun foolishness these days is a result of desperation. The gun grabbers have lost the argument and keep losing it. Every time someone is hot, they try to milk the tragedy for more gun laws and it simply doesn’t happen.

How desperate are they? Well, the Brady Campaign has gotten shooting Alice in Wonderland in the face desperate.

Update: Oh. Guns are now racist as well.