This is the 10th entry in a series on how the next president can reduce bureaucracy. Earlier installments have addressed a freeze on rulemaking, the role of law and economics staff in policy making, rule review and repeal, stricter cost analysis, dissecting regulatory dark matter, boosting Unified Agenda disclosure, tracking rule accumulation, issuing a “regulatory report card,” and improving “major rule” classification.
Part 10: Report Separately On Economic, Health & Safety, and Environmental Regulations
Compared to environmental or health and safety rules, economic regulation lost public favor back in the 1980s. That’s hard to believe today, given amplified telecommunications regulation like net neutrality, the Dodd-Frank financial law, auto bailouts, national health insurance regulation, and government investment in and steering of technologies, as opposed to a hands-off “techno-libertarianism.”
Alas, such economic regulation is often the domain of independent agencies, and not subject to the (limited) central Office of Management and Budget (OMB) review we’ve described that executive branch agencies get.
This is an interesting turn of events, since the origins of executive branch regulatory review were driven in part by the recognition that economic regulation worked against the public interest. Such views were reflected in OMB’s willingness to adopt the premise that some economic regulation “produces negligible benefits.”
Indeed, whether the proposition is “fine‑tuning” the macro economy or direct government management of a specific industry’s output and prices or entry into that industry, coercive economic interference disregards governmental failure. No fundamental appreciation of the impossibility of central economic planning and calculation exists today, nearly 100 years of experience with the alleged “expertise” of the administrative state. Quite the opposite: Starry-eyed planners still think if only their ideas prevail, government manipulation will turn out well and actually improve things.
But at this stage of political, business, and economic history, much economic regulation may no longer be presumed rooted in serving the public interest. They serve certain elements of the regulated producer class, and their captured bureaucratic employees (the two highest-income counties in the U.S. are Fairfax and Loudon, V—both D.C. suburbs).
Even if the new president wishes to address economic regulation in today’s climate, he or she must overcome the lack of oversight of independent agency rules in the existing central review process. While presenting itself as authoritative with aggregate regulatory net benefits, the annual Report to Congress actually conceals more than it reveals in this regard, given an emphasis solely on executive branch agencies’ health and safety rules.
So, given that health and safety regulations differ from economic regulation, separate presentation of rules and effects—in the Report to Congress, in any Regulatory Transparency Report or elsewhere—is important from the standpoint of comparing relative merits of regulations. For example, when talking costs and benefits, it is meaningless to compare purported economic benefits from an energy regulation with lives saved by a safety regulation. Instead, cost categories should be presented and analyzed separately and congressional accountability for outcomes established.
With executive branch buy-in, to the extent that analyses like the OMB Report to Congress can help delegitimize economic intervention and red tape, such realms can be freed from government purview altogether (a utopian thought, as aggressions as recent as the Federal Communications Commission’s net neutrality rule clearly attest).
But with that new wisdom, we would leave Congress and OMB with the “lesser” task of documenting and controlling costs of environmental, health, and safety regulations. Then, where health and safety rules reveal that they too have private interest underpinnings or are detrimental to the public, a motivated executive can urge change for them as well. Isolating categories for analysis is a first step toward enabling better oversight of the federal regulatory enterprise.
Also in this Series:
How a New President Can Roll Back Bureaucracy, Part 1: Freeze Regulations Temporarily
How a New President Can Roll Back Bureaucracy, Part 2: Boost Regulatory Review Resources and Free Market Law and Economics Staff at Agencies
How a New President Can Roll Back Bureaucracy, Part 3: Professionalize Review, Revision, Repeal and Sunsetting of Regulations
How a New President Can Roll Back Bureaucracy, Part 4: Expand Number of Rules Receiving Cost Analysis
How a New President Can Roll Back Bureaucracy, Part 5: Scrutinize All Agency Decrees That Affect the Public, Not Just Formal “Rules”
How a New President Can Roll Back Bureaucracy, Part 6: Enhance Rule Disclosure In the Unified Agenda of Federal Regulations
How a New President Can Roll Back Bureaucracy, Part 7: Track the Accumulation of Federal Regulations as Businesses Sectors Grow
How a New President Can Roll Back Bureaucracy, Part 8: Compile an Annual Regulatory Transparency Report Card
How a New President Can Roll Back Bureaucracy, Part 9: Improve the Classification of Major Rules
This series builds upon recommendations in “One Nation Ungovernable? Confronting the Modern Regulatory State,” in Donald J. Boudreaux, ed., What America’s Decline In Economic Freedom Means for Entrepreneurship and Prosperity, Fraser Institute and Mercatus Center at George Mason University (2015), pp. 117-181.