Small businesses feature prominently in the US economy because they employ about 50 percent of the workforce and pay about 50 percent of American wages. Also, small businesses are often a source of innovative ideas that can drive growth. To the extent that access to finance plays a role in bringing those ideas to the real economy, small-business finance remains important for the future of the economy. Yet new financial regulations arising from the Dodd-Frank Act that were intended to stabilize the banking industry after the 2008 financial crisis may be unintentionally limiting small businesses’ access to credit.
In a new study from the Mercatus Center at George Mason University, researchers Stephen Matteo Miller, Adam Hoffer, and David Wille provide a review of the latest academic research into the major sources of capital used by small businesses in the United States and summarize the major trends and challenges that small-business owners face in obtaining capital today.
The federal role in highway spending is expected to get smaller because fuel tax revenues are decreasing and Congress is holding off on raising the federal gas tax rate. Meanwhile, states are not getting the most out of their highway spending. Traffic congestion plagues urban areas, and simply investing in highways and transit will not be enough to fix the problem.
A new study for the Mercatus Center at George Mason University discusses general principles that can help states maximize the value they get from their highway spending. While no two states are identical, policymakers can still learn from one another by observing what works and using the same general principles to create reforms that work for their states.
Certificate-of-need (CON) laws are among the various experiments policymakers have conducted in an effort to curb the growth of healthcare spending. Currently in place in 35 states, these laws require new or expanding healthcare providers to prove to their state government that they are economically necessary and that they effectively limit the supply of healthcare services.
Do citizens have the right to determine their own courses of treatment and to use medicines and devices that they believe could improve their health? In other words, do patients have a “right to try” medicines and devices that can help them?
Executive Order 12866, which governs regulatory analysis and review in the executive branch, requires federal agencies to conduct a regulatory impact analysis (RIA) for all economically significant regulations. (An “economically significant” regulation has economic effects of at least $100 million annually or satisfies other criteria listed in the executive order.) The purpose of this analysis is to understand the problem the regulation aims to solve, identify alternative solutions, and assess the benefits and costs of the alternatives, in order to create regulations that solve real problems at a reasonable cost.
In 2009, the Mercatus Center at George Mason University initiated the Regulatory Report Card project to assess how well executive branch agencies conduct regulatory analysis. In a new study for the Mercatus Center, senior research fellow Jerry Ellig uses the data from this project to examine the quality of RIAs for all economically significant, prescriptive regulations proposed between 2008 and 2013. Report Card evaluations reveal that regulatory agencies often adopt regulations that affect several hundred million Americans and impose billions of dollars of costs without knowing whether the regulation will solve a significant problem, whether a more effective solution exists, or whether a more targeted solution could achieve the same result for a lower cost. Extensive statistical analysis of the scores suggests that institutional reforms are the most promising means of improving the quality and use of regulatory analysis.
The Affordable Care Act (ACA) significantly altered the rules governing health insurance, especially in the individual market. While the law has increased the number of people with health insurance, lower-than-expected enrollment in the new health insurance exchanges and significant insurer losses have resulted in substantial premium increases and insurer withdrawals from state markets. These negative outcomes cast increasing doubt on the ACA and its long-term sustainability.
When Congress passes legislation that mandates prescriptive regulations, legislators are under no obligation to understand the problem they are trying to solve, assess alternative solutions, or understand the benefits and costs of their choices. Passage of the positive train control mandate in response to several high-profile train accidents amply illustrates how haphazardly the legislative branch can authorize regulations. Congressional hearings and committee reports on the Rail Safety Improvement Act of 2008 contain no analysis of the causes and extent of the safety problem, alternative solutions, and the benefits and costs of alternatives to this $12.5 billion mandate. Given that major regulations are often required by statute, the time has come for Congress to subject regulatory legislation to the same kind of analysis that presidents have required regulatory agencies to conduct for more than three decades.
Medicaid was established in 1965 as a joint state and federal program to provide medical insurance to Americans who are poor and have disabilities, and it has grown from 1 percent to 3 percent of GDP. The source of Medicaid’s growth over the past 50 years must inform efforts to reform the program and slow spending. The literature on the political economy of Medicaid provides strong evidence of interest group and political ideological influence, enabled by the open-ended federal match for state spending.
Visiting Scholar David Beckworth demonstrates that poor monetary policy set by the European Central Bank (ECB) played a key role in the two recessions, sparked the sovereign debt crisis experienced by several Eurozone countries, and exacerbated the impact of the austerity programs.
Concern about income inequality has dramatically shifted public attitudes toward economic and fiscal policy, and the subject of inequality has increasingly dominated the political debate. But the discussion has focused almost exclusively on comparing the earnings of lower- and higher-paid workers, and on promoting redistributive policies aimed at “correcting” this disparity. New research finds, however, that both scholars and politicians have largely overlooked a key contributor to earnings inequality: the role of rapidly increasing healthcare costs.
In a new video, Mercatus Center Senior Research Fellow Brian Blase discusses a report from the Department of Health and Human Services that finds Medicaid enrollees who gained coverage through the Affordable Care Act cost almost 50 percent more, on average, than the government projected just one year ago.
Central banks' part in the Great Recession, and the lackluster recovery since, are reviving interest in monetary rules. That revival raises crucial questions. Might the Federal Reserve and other central banks have performed better if they’d adhered to monetary policy rules? Could rules have avoided the crisis altogether? Can they avoid future crises? If so, which rules work best? Can a monetary policy rule work even in a world of near-zero, or negative, interest rates?
Rebounding after disasters like tsunamis, hurricanes, earthquakes, and floods can be daunting. How do residents of these communities gain access to the resources they need to rebuild while overcoming the collective action problem that characterizes post-disaster relief efforts?
Please join the F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University for a panel discussion featuring Hayek Program Senior Fellow Virgil Storr and his new book Community Revival in the Wake of Disaster: Lessons in Local Entrepreneurship.
As the world’s first decentralized digital currency, Bitcoin has the potential to revolutionize online payment systems and commerce in ways that benefit both consumers and businesses. Individuals can now avoid using an intermediary such as PayPal or submitting credit card information to a third party for verification—both of which often involve transaction fees, restrictions, and security risks—and instead use bitcoins to pay each other directly for goods or services.