Category: Technology and Regulation

red-tape-govt-300x300Of all the executive orders issued by President Obama, one of the most important is one most people never knew existed: Executive Order 13563 – Improving Regulation and Regulatory Review .

In the order, the president requires federal agencies to perform a “retrospective analysis” of existing regulations to evaluate their efficiency and effectiveness:

(a) To facilitate the periodic review of existing significant regulations, agencies shall consider how best to promote retrospective analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned. Such retrospective analyses, including supporting data, should be released online whenever possible.

(b) Within 120 days of the date of this order, each agency shall develop and submit to the Office of Information and Regulatory Affairs a preliminary plan, consistent with law and its resources and regulatory priorities, under which the agency will periodically review its existing significant regulations to determine whether any such regulations should be modified, streamlined, expanded, or repealed so as to make the agency’s regulatory program more effective or less burdensome in achieving the regulatory objectives.

This executive order was issued four years ago—in January 2011. So how is that evaluation process going?

In 2014, the George Washington University Regulatory Studies Center launched a yearlong effort to evaluate high priority proposed rules to “determine whether it was designed in a manner that would make its outcomes measurable ex post.” Unfortunately, their findings are not at all surprising:

pharma-pills-and-moneyLast month Turing Pharmaceuticals felt the backlash after a medication they sold for $1 a pill in 2010 increased overnight to $750 a tablet.

Politicians like Hillary Rodham Clinton and Bernie Sanders were quick to claim that this is why we needed more government intervention in the healthcare system. But at the time I pointed out that the reason Turing was able to raise the price so spectacularly was not because of a failure of the free market but because of government intervention:

The free market isn’t the reason [Turing’s CEO] Shkreli was able to raise the price. In fact, if he had to sell his product in a truly free market environment the price would likely remain low. And even now, if he continued to keep the price high, some enterprising pharmaceutical company would start making Daraprim themselves, increasing the supply and lowering the cost.

And that’s just what happened. That enterprising pharmaceutical company turned out to be Imprimis Pharmaceuticals. The company announced yesterday that it will start offering customizable compounded formulations of pyrimethamine (the generic name for Daraprim) and leucovorin in oral capsules starting as low as $99.00 for a 100 count bottle, or at a cost of under a dollar per capsule.

In making the announcement Mark L. Baum, CEO of Imprimis, said,

pollution“The rules don’t apply to me,” is a favorite maxim of toddlers, narcissists, and government officials. This is especially true of the legislative branch, which frequently exempts itself—and its 30,000 employees—from federal laws that apply to the rest of us.

But just as often government at all levels simply ignores laws it finds too burdensome to comply with. A recent study published last month in the American Journal of Political Science titled “When Governments Regulate Governments” found that “compared with private firms, governments violate [the U.S. Clean Air Act and Safe Drinking Water Act] significantly more frequently and are less likely to be penalized for violations.”

Researchers David Konisky and Manny Teodoro viewed records of more than 3,000 power plants, 1,000 hospitals and 4,200 water utilities. Some of their findings include:

Blog author: jballor
Thursday, October 15, 2015

664975_084I saw The Martian this week and was struck by the number of resonant themes on a variety of is issues, including creation, creativity, innovation, entrepreneurship, exploration, work, suffering, risk, and civilization.

I won’t be exploring all of these in the brief reflections below, but will simply be highlighting some salient features. The film communicates something seriously important about the threefold relations of human beings: to God, to one another, and to the creation.

There will be some potential spoilers in the discussion below the jump after this line.

ssn-gunsThe Obama administration is pushing to ban Social Security beneficiaries from owning guns if they lack the mental capacity to manage their own financial affairs.

When I first heard this claim, I assumed it must be a false rumor circulating on social media and less-than-reputable websites. Instead, it turns out, if the L.A. Times can be trusted, to be true account of the White House’s intentions.

The push is intended to bring the Social Security Administration in line with laws regulating who gets reported to the National Instant Criminal Background Check System, or NICS, which is used to prevent gun sales to felons, drug addicts, immigrants in the country illegally and others.

A potentially large group within Social Security are people who, in the language of federal gun laws, are unable to manage their own affairs due to “marked subnormal intelligence, or mental illness, incompetency, condition, or disease.”

There is no simple way to identify that group, but a strategy used by the Department of Veterans Affairs since the creation of the background check system is reporting anyone who has been declared incompetent to manage pension or disability payments and assigned a fiduciary.

According to the LAT, the policy change would affect about 4.2 million adults who receive monthly benefits that are managed by “representative payees.”

The first question the Obama administration should have asked before implementing the “solution” was “Is there a problem?” Are there currently a lot of Social Security recipients who pose a threat to themselves and others by owing a firearm?” The second question they needed to ask was if incompetency in financial matters is the standard, must they also take guns away from everyone in Congress?

clover-power-stationWith the Supreme Court handing down significant rulings on such issues as housing, Obamacare, and same-sex marriage, it’s not surprising other decisions handed down last month received less attention. A prime example is the defeat the Court handed to President Obama administration’s agencies.

In the 5-4 ruling, the Supreme Court recently struck down forthcoming EPA regulations concerning emissions of mercury and other toxins at power plants.  the Court pointed out that the EPA did not properly consider the costs of regulating such emissions from coal-fired power plants before imposing the regulations.

Congress had previously authorized the EPA to take any “appropriate and necessary” action to regulate power plants. In this case, the EPA found power plant regulation to be “appropriate” since the plants’ emissions pose risks to the environment and because controls capable of reducing these emissions were available. The agency also found regulation “necessary” because the imposition of other Clean Air Act requirements did not eliminate those risks.

But five of the nine justices found the EPA had failed to due diligence. “Read naturally in the present context, the phrase ‘appropriate and necessary’ requires at least some attention to cost,” wrote Justice Scalia in his opinion for the Court. “One would not say that it is even rational, never mind ‘appropriate,’ to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits.”

Coal power plant Datteln 2 Crop1Today at The Federalist I explore “Why Big Oil Wants A Carbon Tax.” Perhaps such advocacy isn’t just made out of a sense of global citizenship and environmental stewardship.

On the surface such advocacy may seem counter-intuitive. Why on earth, other than out of selfless benevolence, would a firm (or group of firms) advocate for higher taxes on their products? But on reflection, it makes some sense, and the reasoning is similar to why an online retailer like Amazon might be in favor of the collection of sales tax at the state level.

As Adam Smith famously put it, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Companies are often happy to raise prices if it hurts their competition or provides them with a competitive advantage. And in the case of carbon taxes, it’s important to recognize that not all fossil fuels are equally carbon-intensive, just as not all renewable sources are equally sustainable and resilient.

This is one of the economic realities that I wish Pope Francis had recognized more clearly in Laudato Si’, although I may have more to say about this later. For now, David Brooks expresses a similar desire in his column, “Fracking and the Franciscans.”