January 30th, 2014, 7:30pm.
January 30th, 2014, 7:30pm.
In my last post, I wrote generally about the trade-offs in regulations. The idea being that regulations are simply “good” versus “bad” is not a constructive argument. In this post, I hope to highlight some regulations I consider bad and perhaps look into more appropriate regulations.
The Dodd-Frank Wall Street Reform and Consumer Protection Act is probably a good place to start. As the linked article points out, the Consumer Financial Protection Bureau (CFPB) is not funded by congress and hence very little accountability to them. So-called “Systemically Important” banks is essentially codifying “Too Big to Fail” — exactly the wrong message to send to banks that were bailed out for previous failures. Nearly 14,000 pages of regulation have been cranked out to implement the law. Note here that the bill itself was approximately 2,253 pages, but couldn’t contain a fourth of the myriad actual regulations it has spawned. This Forbes’ quote represents a what seems to be a consensus:
This sounds all rather confused. But that may just be the point of Dodd-Frank: to keep everything churned up so that no one is sure at any given point what the rules really are. That way financial institutions (very broadly defined in D-F as banks, insurers, and anything else that might conceivably qualify) have to constantly ask for help and guidance from busy and powerful financial regulatory bureaucrats in figuring out what they may or may not do.
And yet they didn’t even address Glass-Steagall, whose repeal many implicate in the crash.
This 2011 National Review Article gives perspective perspective on the pace of new regulations in general :
How busy have these thousands of regulators been? The numbers tell the story. The first Federal Register was issued in 1936. It contained eleven pages! For the first 147 years of the nation’s existence under the Constitution we somehow managed to get by with only eleven pages of regulations. During that time we went from an insignificant state to the most powerful and economically vibrant nation on the globe. By 2008 the Federal Register contained 31,879 documents and 79,435 pages, while the Code of Federal Regulations comprised 163,333 pages in 226 individual books. Rules have been accumulating at a rate of nine pages a day since 1936. … The Federal Register has grown 20 percent in just the last two years, and there are another 4,225 rules already written and winding their way through the system.
How can anyone keep up with all these rules? Like the Tax Code, they can’t. They hire specialists, often the ones that wrote the regulations.
Moving on The Occupational Safety and Health Administration’s (OSHA), The Hill reports:
For decades, Congress has inserted language in appropriations bills prohibiting OSHA – an arm of the Labor Department – from enforcing provisions of the 1976 Occupational Safety and Health Act at farming operations with 10 or fewer employees.
But in recent months, the agency has begun issuing thousands of dollars in fines under the statute, saying that it has jurisdiction over non-farming operations – including grain storage – on farms, the lawmakers said.
“Lo and behold, OSHA has decided it can label certain sections of the farm as something else – by fiat – and send in their inspectors,” Johanns said in remarks on the Senate floor before Congress adjourned for the year. “OSHA ignored what Congress directed.”
This perfect storm of increased regulations and increased oversight has had a ruinous effect. For example, during the Bush Administration, Congressman Henry Waxman often pummeled the Food and Drug Administration (FDA), demanding more oversight and more regulatory reviews in an unrealistic quest to find perfect, risk-free medications.
When Barack Obama became president, Democrat acolytes took over the FDA and implemented the strategy of excessive regulatory control that Waxman had advocated. And what was the effect?
New pharmaceutical development, once an American competitive edge, has slowed to a crawl and the nation is in danger of losing its leadership in new drug development. In 1996, the FDA approved approximately 45 new drugs—and the world clamored to buy American pharmaceuticals. Now, despite larger budgets, increased manpower and more sophisticated technology, the FDA approves only 20 new drugs each year.
And where to begin with the EPA?
I’d like to do a whole post on the EPA. I’m not saying it shouldn’t exist or doesn’t do any good, but they really seem out of control to me (and, apparently, SCOTUS), micro-managing and usurping state environmental agencies’ power.
If you’re not familiar with crony capitalism, it is “A term describing an economy in which success in business depends on close relationships between business people and government officials.” This generally comes into play when regulations are created arbitrarily too arduous for small business or other competitor compliance. A very clear case of this is a 2009 law that benefitted Altria/Phillip-Morris over its competitors in the tobacco industry.
Here are a few links speaking of crony capitalism more broadly:
To sum up, I think regulations are essential, but they should be understandable, accessible to congress, and as local as is reasonable.
If you’d like to submit a comment, please fill out this form in triplicate and have it authorized by your supervisor and his or her supervisor. We will get back to you in 10-14 business days.
John Stossel on “Regulation and the Small Entrepreneur”:by
There’s more to regulations than economics, but I think this definition is instructive:
Economics is the study of the use of scarce resources which have alternative uses.
In this sense of scarcity, ocean water is scarce, as opposed to infinite. As these scarce resources have alternative uses, any choice to be made is a trade-off. There is no free lunch.
And so, with regulations, safer cars may be less fuel efficient, more fuel efficient cars may be less safe, and either type of regulation may price the automobiles out of the budgets of the poor.
Don’t get me wrong, there are a lot of win-wins out there, such as computers becoming more energy efficient and cheaper, while maintaining performance, but there’s still the issue of more people buying more computers more often (as they’re cheaper), adding to the ecological footprint, blah, blah, blah.
The point is there’s always some trade-off and I think that should be considered before forging ahead with the regulation panacea du jour.
For example, I think there should be a clearer distinction between regulation specifically enacted by a legislative body and a legislative body empowering a bureaucratic body to enact regulations on its behalf. Both have their place, but it’s not the same thing. Similar considerations arise when looking at various levels of sovereignty.by
If you haven’t heard of Mark Levin’s Liberty Amendments, it’s quite a thought-provoking premise, regardless of your thoughts on his specific prescriptions. The premise is that Article V of the U.S. Constitution provides two methods of amendment. The first, which has always been used, originates in Congress and and then is ratified by 3/4 of the states. The second, the focus of his book, originates in a Convention of the States where amendments are proposed and then ratified.
To me, this is exactly what we need with a Federal Government that has lost touch with its electorate. A perfect example is congressional term limits. Not only will congress never term limit itself, the Supreme Court decided that states cannot impose term limits on their Federal representatives. SCOTUS may or may not have been constitutionally correct in its verdict, but that is what the amendment process is for. Not only do people live longer now, the Founding Fathers couldn’t foresee the war chests (another issue) that incumbents bring to their re-election, where John Dingell has been in office for 29 years and counting. One could argue that it’s the people’s right to continue to send the same representative over and over, but I think it’s a discussion worth having.
Again, the primary concept here is the general idea of the states and people taking back control of the Federal government, but Levin offers his ideas, which I consider a good start and summarize:
You may not like some of those, though I recommend you read the whole book to see the reasoning of both Levin and the Founders he references.
You can keep up with the process at conventionofstates.com.by
If you haven’t heard about the somewhat under-reported chemical spill in West Virginia that left over 300,000 without drinkable water, a coal-related chemical plant that hadn’t been inspected since 1991 had a leak in one of its containers, which happened to be right above a major watershed. This was complex for me from the jump, because I generally think that the EPA is out of control and that Americans and American businesses are over-regulated, but the details just cited seem to cry for a more powerful EPA and more regulation. I hope to do a full post on regulation, as my position is nuanced, so to summarize, the context of this tragedy gave me serious pause for thought.
But that was just the beginning. I quickly found this article in the New Republic, which further alleges that coal slurry has forced up to 100,000 residents to abandon private wells to access water from a utility company and (perhaps relatedly), there is extensive coal industry cronyism and corruption in West Virginia (both in policy legislation and enforcement of that legislation). I have some issues with and doubts about some of the details, but certainly further cause for concern and thought.
I discovered that the Charleston Gazette has a series devoted to the developments in the WV coal industry, Mining the Mountains.
Then I found this article. The site looks like something from the 90s, but it looks at the serious economic and social crises in WV and it digests some more reputable sources on the depth of the situation. The culture of widespread joblessness, drug abuse, and welfare fraud it reports is repulsive and begs for reprieve.
The article primarily blames NAFTA and its ilk, warning about the proposed Trans-Pacific Partnership, which, depending on who you listen to, will expand free trade or enslave us all. The Bipartisan Congressional Trade Priorities Act of 2014 is reportedly the name of the bill to codify this partnership, which critics say will severely limit individual and U.S. sovereignty. I tried to read it, but even thought it’s only(?) 103 pages, it’s pretty cryptic. I found this digest, which is pretty damning if accurate, but provides the silver lining that it seems to be stalled via backlash. That may all be conspiracy drivel, but does beg the balances of protectionism versus promoting prosperity and sovereignty versus globalism.by
Great stuff on MLK Day from the man himself. Such great responses on a complex topic steeped in erudition, history, theology, philosophy, etc.by
I launched a new site last night, InformedElectorate.net. It’s pretty basic right now, but wanted to get something out there.
The impetus for the site was going into the ballot box unfamiliar with the contents of the local/state ballot and then being frustrated when I tried to look into the ballot as early as possible, and still had trouble finding the positions of the people I was voting for. Note in the previous link (in the list of candidates), that I could only find facebook pages and official city/county pages for most people. Some people I couldn’t find anything. The local newspaper and radio station have been some help, but I still felt ill-informed when voting for, say, Township Trustee.
So the idea of the site is to make it easier for citizens to find out about their (esp. local and state) candidates and, necessarily, to make it easier for candidates to share and interact with citizens. This is a long term goal.
Currently, there’s only federal and state data for current representatives (and only congress, nothing about your state treasurer, for example), but the model I’m using for acquiring the data has to do with what’s called an Application Programming Interface (API). This basically means that a provider (government or a third party, in this case) will provide information in a predictable way that can be parsed by a developer and used. To be more concrete, for example, opencongress.org is a great website to find out about federal legislative action. They and openstates.org are products of the Sunlight Foundation which is where I get most of my current data, via their APIs. However, I could also use data from govtrack.us, which tracks similar information, or opensecrets.org (data, Center for Responsive Politics) which tracks financial contributions. There are also resources directly from the government, such as from the U.S. Small Business Administration and others. Hats off also to democracymap.org, who appear to be trying to aggregate all this data.
Regardless of my efforts, I feel this is inevitable in the internet age.
Etymologically, they both come from Old French “deliberation” from the Latin, “deliberatrionem”, [ late 14c., Old French deliberation, from Latin deliberationem (nominative deliberatio), noun of action from past participle stem of deliberare "weigh, consider well," from de- "entirely" (see de-) + -liberare, altered (perhaps by influence of liberare "liberate") from librare "to balance, weigh," from libra "scale." ].
The concepts of “deliberating the best course of action” and “deliberately taking an action” seem worlds apart. To say someone deliberately did something basically means that you believe they had at least some form of rational intention. Sociopaths actions may be deliberate, but they failed to deliberate before choosing a course of action.by
The data isn’t sourced, but looks about right. The totals pretty much jive with numbers from the White House. The main point is that we are spending more than we are taking in on just mandatory spending and debt service. Both constitutionally and economically, we must first service our debt. So we can’t cut that at all, or for that matter, stop its increase if we continue borrowing, or if the current historically low interest rates should rise. Mandatory spending is spending we are legislatively bound to. It’s mostly entitlements. We’re not going to spend less here unless we change the laws. Further, if the laws don’t change, we will be spending more here as the baby boomers start collecting social security. This leaves defense and all other spending. While these areas can and should be streamlined, they cannot be eliminated and even if they could, we would still be spending more on mandatory spending and debt servicing than we take in. Therefore, short of action, we will need to borrow more and the debt servicing budget will continue to increase in a viscous cycle.
Another note: Nearly one-third of our spending is unfunded. The White House projects our revenue to close the gap with skyrocketing spending. Not sure how they intend to do that. Hyperinflation?by
I keep hearing about how budget analyses like the one where you take six* digits off the Federal figures and apply it to a family lack understanding in economics.
I admit it’s a simplification, but when our President says, “If you’re in negotiations around buying somebody’s house, you don’t get to say, well, let’s talk about the price I’m going to pay, and if you don’t give the price then I’m going to burn down your house,” that kind of opens up the playing field for my own analogy. Here goes:
If you owe lots of people lots of money and need to continually rack up more credit cards, you might want to tighten your belt.
Don’t ask me how. On the analogy level, if you go out to eat every day, taking your lunch on occasion can bring savings. On a macro-economic level, one might think of disability fraud, but that’s been debunked.
*eight, my bad.