Making the Perfect the Enemy of the Good: Everything-Bagel Public Policy

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Thanks to Caleb Watney of the Institute for Progress for recommending the great New York Times column by Ezra Klein about the red tape that’s holding America back. It’s titled “The Problem with Everything-Bagel Liberalism,” and refers to the expanding trend of forcing every major project to serve multiple – often conflicting – goals. That includes both government projects and the many private projects that need government permission or financing to proceed. That planning burden and splintered focus ends up making everything slower, more complicated, and more expensive. The entire country becomes poorer as a result.

Klein highlights one big example that’s gotten a lot of comment lately – the CHIPS Act, which provides billions of dollars in taxpayer subsidies to support the domestic microchip manufacturing sector. While I think this kind of industrial policy is highly questionable in the first place, if we’re going to have it, it might as well be implemented in a way that produces as much of the desired outcome as fast and affordably as possible. But that seems unlikely, because of the multiple layers of unrelated requirements that the Department of Commerce has decided to add to the approval process.

This accumulated series of regulatory hoops includes so-called nudges that suggest firms applying for CHIPS Act funding do things like buy only from U.S. suppliers, hire minority subcontractors, hire more female employees, and even very specific expectations like building daycare facilities to serve the new factories that will fabricate the chips – a/k/a the fabs. But the problem is that those expectations, even when they’re not explicit legal requirements, make implementing the policy is question slower and more expensive.

The same is true of the anecdote that Klein uses to open his column – an affordable housing complex in San Francisco that only got built because its mostly private financing meant that it was able to duck some of the mountain of paperwork that the city usually requires of such projects. If walling off development from the normal affordable housing processes is the only way for it to get build, that would suggest that the rules is question are doing more harm than good. But there seems to be very little appetite for reevaluating the process in places like San Francisco.

Klein concludes by saying:

I’m not predicting failure for CHIPS because it includes a child care mandate. These are expensive factories that can figure out child care. But even if no single standard or mandate is decisive on its own, the accumulation of them, in an industry in which we’ve already fallen ruinously behind on cost, can do real damage.

That’s the lesson of “affordable” housing in California. If something as easy to build as a studio apartment complex can become intolerably expensive and slow, then it’s folly to think that far worse can’t befall a fab that ultimately has to compete for customers globally. And if you think failure really is an option — that it’s maybe even the likeliest outcome — then that demands an intensity of focus that liberalism often lacks.

If we want an abundance agenda in the United States, we’re going to have to legalize just focusing on a single important goal rather than making every project a Christmas tree of goodies for every political interest group with a lobbyist. We can’t buy American, support unions, enforce diversity mandates, expect zero emissions, fund nature preserves, and pledge not to demolish any house a famous person ever slept in while also attaining our industrial and social policy goals. Sometimes you just need to build stuff that’s vital for the future of the country without first asking twenty different people for permission. We also covered this topic on Episode 15 of the Free the Economy podcast. Listen here, starting at 4:52.