My three-part message today is this. First, Congress should treat the budget process as a means, not an end, and enact reforms accordingly. Second, given the fiscal challenges facing the country, now is not the time for minor tweaking. Instead, now is the time to think big and craft a process that drives legislators to produce credible and sustainable fiscal policy by constraining federal spending both today and tomorrow. Third, any reform should include effective enforcement mechanisms, preferably constitutional in nature, to prevent the new process from suffering the same fate as the current one.
Thirty-five years ago, President Jimmy Carter began an experiment to, in his words, “regulate the regulators” to “eliminate unnecessary federal regulations.” His experiment was to form, through the Paperwork Reduction Act of 1980, the Office of Information and Regulatory Affairs within OMB to allow the president to gain control over the regulatory agencies. We have now had 35 years of experience to see if President Carter’s goals have been achieved. They have not.
This comment addresses the efficiency and efficacy of this proposed rule from an economic point of view. Specifically, it examines how the proposed rule may be improved by more closely examining the societal goals the rule intends to achieve and whether this proposed regulation will successfully achieve those goals. In many instances, regulations can be substantially improved by choosing more effective regulatory options or more carefully assessing the actual societal problem.
There is little evidence to support the claim that certificates of need are an effective cost-control measure; and Stratmann and Russ have found that these programs have no effect on the level of charity care provided to the poor. While controlling health care costs and increasing care for the poor may be laudable public policy goals, the evidence strongly suggests that CON regulations are not an effective mechanism for achieving them. Instead, these programs simply decrease the supply and availability of health care services by limiting entry and competition.
In this brief comment, I will focus on the correct framework to use in selecting the appropriate interest rate when valuing public pension sector liabilities. A framework based on economic principles will accurately measure the market value of these liabilities and is superior to the actuarial approach.
Financial regulation should consist of clear, consistently enforced rules within which customers and financial institutions can freely interact. A well-functioning market enables people who need financing to obtain it efficiently and at a competitive price. Market forces reward financial companies that serve consumers well and discipline firms that fail to provide products and services in a form and at a price that consumers want.
Contrary to what you will hear from its supporters and beneficiaries, the Ex-Im Bank plays a marginal role in export financing—backing a mere 2 percent of US exports each year. The vast majority of exporters secure financing from a wide variety of private banks and other financial institutions without government interference or assistance. With US exports hitting record high levels, it is obvious that such financing is abundant and government assistance is superfluous.
The commission should shift enforcement efforts away from stopping private restraint of trade and toward stopping public restraint of trade. In light of George Stigler’s observation that “the state has one basic resource which in pure principle is not shared with even the mightiest of its citizens: the power to coerce,” the commission would be wise to adopt Commissioner Wright’s approach and shift resources toward fighting public restraint of trade.
A new public interest comment by economist Todd Nesbit, written for the Mercatus Center at George Mason University, demonstrates that the proposed rule fails to show a need for the rule, fails to properly assess the benefits of the rule, and does not consider alternatives to the rule. The regulatory impact analysis should be improved to account for these failures.
The Dodd-Frank Wall Street Reform and Consumer Protection Act—does not make another crisis less likely. To the contrary, it sets the stage for another, worse crisis in the future. Government regulation—from bank regulation to housing policy to credit rating agency regulation—played a key role in the crisis. These policies shaped market participants’ behavior in destructive ways. Dodd-Frank continues that pattern.
Are all of the rules and regulations governing economic activity a product of central planning or legislation? Edward Stringham argues that much of what is orderly in the economy can actually be attributed to governing mechanisms devised and enforced by private groups and individuals.
Luigi Zingales, one of the world’s foremost thinkers on financial development and capitalism, will join Tyler Cowen for a wide-ranging, intellectual dialogue as part of the "Conversations with Tyler" series.
This book presents 17 oral histories of Hurricane Katrina survivors from four diverse New Orleans communities. The oral histories explore how these individuals, families, and communities began to rebuild after the devastation.