Regulation in the News

Over at Breitbart’s Big Government site, Kerry Picket writes up some of the most recent (and alarming) numbers coming from the regulatory state.

CEI’s Battered Business Bureau: The Week in Regulation

While Congress was busy with the 1,603-page Cromnibus bill (full text), agencies added nearly that many pages to the Federal Register with new regulations for everything from dropped calls to migratory birds.

On to the data:

  • Last week, 63 new final regulations were published in the Federal Register. There were 71 new final rules the previous week.
  • That’s the equivalent of a new regulation every two hours and 40 minutes.
  • So far in 2014, 3,377 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,532 new regulations this year.
  • Last week, 1,475 new pages were added to the Federal Register.
  • Currently at 74,014 pages, the 2014 Federal Register is on pace for 77,421 pages. This would be the 6th-largest page count since the Federal Register began publication in 1936.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 43 such rules have been published so far this year, none in the past week.
  • The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $8.18 billion to $11.65 billion. They also affect several billion dollars of government spending.
  • 272 final rules meeting the broader definition of “significant” have been published so far this year.
  • So far in 2014, 640 new rules affect small businesses; 96 of them are classified as significant.

Highlights from selected final rules published last week:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

Reminder of Basic Principles

From p. 158 of The Social Dilemma, Volume 8 of Gordon Tullock’s Selected Works:

Altogether, the extent to which people have freedom is more or less an inverse function of the number of laws in force.

Think of it as a very 20th century way of saying the same thing Tacitus said about two millennia ago:

The more corrupt the state, the more numerous the laws.

Some principles are timeless. One of them is that simplicity is beautiful, and honest.

New Minimum Wage Study: Tradeoffs Exist

Many progressives strongly support minimum wage increases. This is troubling, because the effects those increases actually have on many poor people are regressive. Signaling your concern for the poor is different from actually helping the poor; feeling good about yourself is often different from actually doing good for others. At the very least, minimum wage supporters should acknowledge that the minimum wage has tradeoffs. It is not a free lunch.

A new study by UC-San Diego economists Jeffrey Clemens and Michael Wither on the minimum wage reaffirms the obvious. Some workers benefit from minimum wage increases, and this is a good thing. But it comes at a cost. Other workers lose their jobs:

Over the late 2000s, the average effective minimum wage rose by nearly 30 percent across the United States. Our best estimate is that this period’s minimum wage increases reduced working-age adults’ employment-to-population ratio by 0.7 percentage point. This accounts for 14 percent of the total decline over the relevant time period.  [p.5]

This finding is in line with what I’ve pointed out before, that the minimum wage has a reverse-Robin Hood effect. Some workers lose their entire income, which gets transferred instead to other workers fortunate enough to keep their jobs, and get raises besides. Income redistribution programs are supposed to flow from better-off people to worse-off people—not the other way around.

If the goal is to lift as many people as possible out of poverty, minimum wage increases are simply not up to the task. The tradeoffs are too severe.

Clemens and Wither also find another, less publicized effect:

In addition to reducing employment, we find that binding minimum wage increases increased the likelihood that targeted individuals work without pay (by 2 percentage points or 12 percent). [p. 4]

They call this the “internship effect.” Internships are often restricted to people well-off enough to afford working for little or no pay for a few months, or even a year, while they learn how to do a particular job. Clemens and Wither find that the internship effect “is concentrated among individuals with at least some college education [p. 4].” Lower-income workers without any college education tend to simply be disemployed altogether. Minimum wage increases hurt the poorest of the poor, intentionally or not.

Iain Murray’s and my recent Washington Examiner article lists other minimum wage tradeoffs:

Breaking out of poverty is difficult for many people, and the evidence is that a minimum wage adds to the difficulty. Workers are fired, hours are cut, jobs are not created, non-wage perks, including insurance, free parking, free meals, and vacation days evaporate, annual bonuses shrink, prices rise, (squeezing minimum wage earners themselves), big businesses gain an artificial competitive advantage over their smaller competitors, and crime rates rise. It is a bleak litany.

Clemens and Wither have put a number on just how much artificial unemployment recent minimum wage hikes have caused: an additional 0.7 percentage points in the working-age adults’ employment-to-population ratio. This translates to just a few tenths of percentage points in the traditional unemployment rate statistic. Which, more importantly, also translates to unnecessary hardship for hundreds of thousands of poor people. They have also added the internship effect to the bleak litany of minimum wage tradeoffs.

In short: like it or not, supporting a minimum wage increase means supporting throwing deserving people out of work. Good intentions do not equal good results.

CEI’s Battered Business Bureau: The Week in Regulation

While the number of new regulations last week was normal, their cost was abnormal, totaling well over half a billion dollars just for the four rules meeting the “economically significant” threshold.

On to the data:

  • Last week, 71 new final regulations were published in the Federal Register. There were 58 new final rules the previous week.
  • That’s the equivalent of a new regulation every two hours and 22 minutes.
  • So far in 2014, 3,325 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,552 new regulations this year.
  • Last week, 1,541 new pages were added to the Federal Register.
  • Currently at 72,535 pages, the 2014 Federal Register is on pace for 77,495 pages. This would be the 6th-largest page count since the Federal Register began publication in 1936.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 43 such rules have been published so far this year, four in the past week.
  • The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $8.18 billion to $11.65 billion. They also affect several billion dollars of government spending.
  • 270 final rules meeting the broader definition of “significant” have been published so far this year.
  • So far in 2014, 632 new rules affect small businesses; 96 of them are classified as significant.

Highlights from selected final rules published last week:

  • The FDA issued a pair of lengthy regulations for calorie labelling and other nutritional information for food from vending machines and restaurants. Their combined annual estimated cost ranges from $110.8 million to $117.6 million.
  • A commitment to transparency is a hallmark of a just and efficient government. A new rule affecting the Medicaid program states, “[W]e are unable to predict and estimate the impacts of this final rule, including those of individual hospitals or groups of hospitals.” The impact analysis, such as it is, does estimate that the rule meets the Congressional Review Act’s definition of a “major rule,” costing $141 million or more annually. I am estimating this rule to cost the bare minimum to meet that threshold, even though that almost certainly underestimates the actual cost.
  • A new Medicare rule is more transparent, and is also quite expensive. In the rule’s phrasing, it “will result in an annual transfer of more than $100 million from providers and suppliers to the federal government,” which it later on estimates will range from $327.4 million to $545.7 million.
  • A technical amendment to the federal government’s National Poultry Improvement Plan.
  • Energy efficiency tests for washing machines.
  • The Copyright Royalty Board has adjusted the composers’ royalty rate for musical performances at colleges and universities.

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.

Towards a Humbler Monetary Policy

Is it possible for opposite policies to both be wrong? Over at the Washington Examiner, I argue that it is. The U.S. is ending its quantitative easing program just as Japan is ramping its up. Those seemingly opposite policy paths are rooted in the same mistaken philosophy. I argue instead for a humbler monetary policy:

 Both Yellen and Kuroda should move their focus away from stimulus, exchange rates and constant tinkering, and toward stability, honesty and predictability in their price systems. Easing of $1.66 trillion has had almost no effect on the U.S. economy. How reality will stack up against the Bank of Japan’s predictions, no one knows.

Along the way there are discussions of Keynesian liquidity traps, the Taylor rule, NGDP targeting, and Bitcoin. The larger point is that central bankers are barking up the wrong tree. Instead of manipulating various economic indicators, they should concentrate on creating a stable, predictable, and honest price system that enables more investment, better investment decisions, and more innovation. Entrepreneurship, not interest rate tinkering, is what causes economic growth and mass prosperity.

Read the whole thing here; see also a facsimile of the print edition here, starting on p. 26.

CEI’s Battered Business Bureau: The Week in Regulation

Regulators had much to be thankful for during the short Thanksgiving work week, with new rules covering everything from grocery store ads to wireless signal boosters to greenhouse gas reporting requirements. The Federal Register also passed the 70,000-page mark on Monday.

On to the data:

  • Last week, 58 new final regulations were published in the Federal Register. There were 59 new final rules the previous week.
  • That’s the equivalent of a new regulation every two hours and 54 minutes.
  • So far in 2014, 3,254 final regulations have been published in the Federal Register. At that pace, there will be a total of 3,551 new regulations this year.
  • Last week, 1,236 new pages were added to the Federal Register.
  • Currently at 70,994 pages, the 2014 Federal Register is on pace for 77,505 pages. This would be the 6th-largest page count since the Federal Register began publication in 1936.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. 39 such rules have been published so far this year, none in the past week.
  • The total estimated compliance costs of 2014’s economically significant regulations currently ranges from $7.60 billion to $10.85 billion. They also affect several billion dollars of government spending.
  • 259 final rules meeting the broader definition of “significant” have been published so far this year.
  • So far in 2014, 609 new rules affect small businesses; 89 of them are classified as significant.

Highlights from selected final rules published last week:

For more data, see Ten Thousand Commandments and follow @10KC and @RegoftheDay on Twitter.