Category: Technology and Regulation

red tapeDo government regulations squelch marketplace innovation? A new study from the U.S. Census Bureau’s Nathan Goldschlag and George Mason University’s Alex Tabarrok says, “Not really.”

According to Ryan Young at the Competitive Enterprise Institute:

…the underlying institutions of social cooperation, market exchange, and dynamism are strong enough that federal regulation has, according to Goldschlag and Tabarrok’s analysis, so far been unable to squelch them. Just as a balloon pressed on one end pushes air to the other end, people will still find ways to cooperate and exchange with each other even when regulations push down on them. This inner strength of human cooperation is my great source of optimism, and Tabarrok draws on similar themes in his excellent 2011 e-book Launching the Innovation Renaissance.

Read “Does Regulation Hurt Innovation? at the Competitive Enterprise Institute.

government-regulation-in-business-red-tapeWhat is the annual cost of regulations for America?

The short answer is that no one knows for sure. The officially reported regulatory costs as reported by the Office of Management and Budget (OMB) total up to $128.7 billion. But the real costs of regulation is impossible since, as the Nobel-winning economist James Buchanan said, “Cost cannot be measured by someone other than the decision-maker because there is no way that subjective experience can be directly observed.”

Still, we can attempt to estimate the costs based on factors that can be measured. Clyde Wayne Crews Jr. of the Competitive Enterprise Institute provides an example of such an estimate. His findings:
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SCLCLast June the Environmental Protection Agency (EPA) proposed a rule change on carbon-dioxide emissions that would affect energy producers, especially in states that rely on coal-fired power plants.

The change is being sold as an attempt to curb global warming, though even it’s supporters grudgingly admit it won’t have much, if any, effect. The change is so small—equivalent to a roughly 6 percent cut in overall US emissions, a 1 percent cut in total global emissions—that’s it’s impact may not even be measurable.

One impact that can be measured, though, is the increase in average monthly electricity bills that will be caused by the change. Depending on who you ask, the increase could be anywhere from 6-7 percent (EPA estimates) to 80 percent (National Mining Association estimates).

While all Americans will be impacted by the increase, our most vulnerable neighbors—the poor, the sick, the mentally ill—will be most affected. As civil rights leader Charles Steele, Jr., president and CEO of the Southern Christian Leadership Conference, says, Christians should find increased energy costs due to this regulation deeply troubling:

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Blog author: jballor
Friday, December 19, 2014
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noun_6905_ccJames K. A. Smith reviews Cass Sunstein’s Valuing Life over at the Comment magazine site. It’s a worthwhile read for a number of reasons, not least of which is that it should move Sunstein’s latest up in the queue.

It seems self-evident that everyone should favor “good” regulation, but the trick is getting some consensus on what defines “good” vs. “bad” regulation. A “people” or “person” centered regulation is a good starting place, perhaps. Or as Smith puts it nicely: “Regulation is made for people, not people for regulation.” Maybe what we need is a personalist revolution in regulation, to say nothing of governance more broadly. A political economy for the people? Yes!

I would insist on some clarifications, though, and note that regulators are often the ones most inclined to get that formula mixed up. Who, after all, will regulate the regulators? (I think the rapper Juvenile asked something like that.) So one distinction I would insist on is that the rule of law is not reducible to or coterminous with the minutiae of regulation. In fact, the latter can often conflict with, rather than support, the former.
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Blog author: jcarter
Wednesday, December 17, 2014
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bitcoin-deadEarlier this year I declared that Bitcoin was (nearly) dead. But as The Princess Bride’s Miracle Max once explained, “There’s a big difference between mostly dead and all dead. Mostly dead is slightly alive. With all dead, well, with all dead there’s usually only one thing you can do.”

Right now, Bitcoin is only mostly dead. As an investment, it was the worst of 2014. As a currency, it was destroyed by the IRS by a single sentence (“For federal tax purposes, virtual currency is treated as property.”). All that really remains is for it to become a financial network. But then it will be likely killed (i.e., all dead) with one word: regulation.

As Henry Farrell explains, Bitcoin has only survived this long because the U.S. government hasn’t really considered it to be a viable financial network:
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Blog author: dpahman
Wednesday, September 10, 2014
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I have spoken in the past in favor of net neutrality, writing,

Whoever is responsible for and best at enforcing it, net neutrality had this going for it: it was a relatively stable, relatively open playing-field for competition…. [T]he fact that companies tried to get around it via copyright protection privileges shows that it was, in fact, doing something to enforce freedom of competition. Now, without it, there is an opportunity for concentration of power…. As [Walter] Eucken illustrated, concentration can lead to instability, and instability leads to popular calls for state regulation, which tend in practice toward cronyism. Certainly, such a trajectory is not inevitable, but it is now more likely, giving good reason for pause at the idea that we do not need net neutrality — or something like it — in the future.

This week, House minority leader Nancy Pelosi voiced her support for net neutrality as well. So why would I object? Because the measures that Pelosi proposes give much more power to the government, following the trajectory outlined above in the direction of over-regulation. (more…)

Reading through the German economist Walter Eucken’s work The Foundation of Economics (1951), I came across one of the most helpful charts for economic analysis I have yet to find. In it, Eucken gives every possible form of market in a single table:

Eucken Chart

The Foundation of Economics, p. 158

Eucken adds four qualifications that are important to keep in mind:

  1. “These forms of market are actual forms which have been or are to be found in actual economic life (often blended with one another, and existing alongside the forms of a centrally directed economy). They are not given a priori. They are discovered with their distinguishing characteristics by studying the planning data of those taking part in the market….”
  2. “Under each particular form of market a man can act according to different principles, for example, that of maximum net receipts or that of optimum output….”
  3. “Each of these forms of market can appear in four types: both open, both closed, or closed on either side only.”
  4. “Fixing of prices by the state occupies a special position, since it can follow any form of market and has different effects accordingly…. For example, the significance of coal prices being fixed by the state varies according to whether perfectly competitive, oligopolistic, or monopolistic supply, or some other form of market, exists, or whether both sides of the market are open, or whether the supply side is closed by an investment veto. Governmental price-fixing is to be treated as a variant of the different market forms and not as a special market form of its own.”

So, what does this amount to? (more…)

eparulesA few weeks ago I wrote about how some leaders of the religious left were supporting the EPA’s proposed new regulations on greenhouse gas emissions from existing fossil fuel-fired electric generating units. At the time I wrote, “While there may be some religious liberals who have been duped into thinking the new proposals will actually affect climate change, most are just signaling their allegiance to the Obama administration and the Democratic Party.”

After I wrote that sentence I wondered if I had been too harsh. Was it possible that these liberal religious leaders had looked at the actual evidence and concluded that the changes would indeed affect climate change? It turns out that the answer must be “no.” There is simply no reason to believe the regulations will have an impact. In fact, using a climate model emulator that was in part developed through EPA support, researchers at the CATO Institute found that the new regulations’ effect on climate change is so minuscule as to be almost immeasurable:
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Blog author: jcarter
Thursday, August 14, 2014
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keep-calm-and-insert-platitude-1A platitude is a flat, dull, or trite remark, especially one uttered as if it were fresh or profound. Politicians love platitudes, which is why we have laws with names like the Clean Air Act, the Pure Food Act, the Fair Sentencing Act, and the Anti-Puppy Kicking Act (okay, I made up that last one). Since no one is for dirty air, impure food, unfair sentencing, puppy-kicking, who could possibly oppose such legislation?

But the devil, as they say, is in the details. Which is why, as Donald J. Boudreau says, “Platitudes are a poor basis for policy.”

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What just happened with Obamacarehealthcaregov site?

In a two-to-one decision, the U.S. Court of Appeals for the District of Columbia Circuit dealt a serious blow to Obamacare by ruling the government may not provide subsidies to encourage people to buy health insurance on the new marketplaces run by the federal government.

What did the court decide?

Section 36B of the Internal Revenue Code, enacted as part of the Patient Protection and Affordable Care Act (Obamacare) makes tax credits available as a form of subsidy to individuals who purchase health insurance through marketplaces—known as “American Health Benefit Exchanges,” or “Exchanges” for short.

This provision authorized low-income Americans to receive tax credits for insurance purchased on an Exchange established by one of the fifty states or the District of Columbia. (The credits were for household incomes between 100 and 400 percent of the federal poverty line.) But the Internal Revenue Service interpreted the wording broadly to authorize the subsidy also for insurance purchased on an Exchange established by the federal government.

The court ruled that a federal Exchange is not an “Exchange established by the State,” and section 36B does not authorize the IRS to provide tax credits for insurance purchased on federal Exchanges.

Can you explain that without the legalese?
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