NFL Trivia

From p. 65 of Peter King’s Monday Morning Quarterback book:

At one point the same lawyer represented Barry Switzer, Jerry Jones[,] and Larry Lacewell of the Cowboys. The lawyer’s name was Larry Derryberry. They once dined together. At the table: Barry, Jerry, Larry[,] and Larry Derryberry.

Does Regulation Hurt Innovation?

How much does regulation crimp innovation? Not very much, according to a new study from the U.S. Census Bureau’s Nathan Goldschlag and George Mason University’s Alex Tabarrok. They find that “Federal regulation has had little to no effect on declining dynamism.” In other words, fewer businesses are starting up today than in previous years, but the authors don’t think federal regulations are among the major causes (see also Tabarrok’s summary over at Marginal Revolution).

That said, the authors are unsure of what else might be responsible: “The subsequent analysis will be unable to address the declining share of employment for young firms as evidence for the secular decline in dynamism and entrepreneurship (p.9).”

They base their regulation exoneration on a dataset called RegData, put together by analysts at the Mercatus Center (disclosure: one of whom is a former professor of mine). It is the best dataset yet devised for quantifying federal regulatory burdens. I’ve cited it before in some of my own work, and will very likely do so again. RegData works by counting the number of times the terms “shall,” “must,” “may not,” “prohibited,” and “required” appear in the Code of Federal Regulations. These individual restrictions are then broken down by industry and over time, going back to 1997. The total number of such restrictions currently in effect is more than one million.

But RegData has limits, and Goldschlag and Tabarrok have exceeded them. RegData counts the number of burdens, but does not estimate how much each one costs. These costs are over the map. One “shall” burden may be nearly costless, such as requiring a business to post a notice of local labor practices in the break room. Given the cost of printing posters and the minute or two of staff time required to hang it up every year, this may or may not cost a business a dollar per year. Another “shall” requiring power plant scrubbers may cost billions of dollars per year. Even though those rules both count as one restriction, they have very different costs.

RegData is state-of-the-art. But the art needs to improve its state before one can convincingly argue that the Code of Federal Regulations doesn’t harm economic dynamism.

For example, regulations tend to help incumbent firms, and give newcomers an artificial disadvantage. Tabarrok and Goldschlag agree with this point, finding that “job creation appears slightly positively correlated with regulation at the industry level (p.10).” And every worker who gets a job at an established firm is one who isn’t working at a startup. The labor force is fluid enough that this isn’t a zero-sum game, but regulations helping incumbent firms still have a crowding-out effect on startups. Regulations still hurt dynamism.

There are two points in Goldschlag and Tabarrok’s favor. One is big, and one is small. The small one is that federal regulations are only part of the story. They also acknowledge “other sources of regulation such as state legislation and judicial regulation through the common law (p.21).” We can add to this local-level and international-level regulations, as well as other countries’ domestic-level regulations that affect U.S. businesses.

Innovation does not necessarily respect boundaries. No doubt some companies offshore many R&D activities when domestic regulations make them too difficult. The companies then bring the fruits of those innovations to the U.S. later, so consumers still  benefit, if more slowly. In these cases, the amount of innovation occurring inside the United States decreases, but the overall amount of innovation is only lightly affected, if at all.

The big point is barely alluded to in the paper. It is that the underlying institutions of social cooperation, market exchange, and dynamism are strong enough that federal regulation has, according to Goldschlag and Tabarrok’s analysis, so far been unable to squelch them. Just as a balloon pressed on one end pushes air to the other end, people will still find ways to cooperate and exchange with each other even when regulations push down on them. This inner strength of human cooperation is my great source of optimism, and Tabarrok draws on similar themes in his excellent 2011 e-book Launching the Innovation Renaissance.

Goldschlag and Tabarrok’s coda is less sensationalist than their lede, but probably more accurate: “global dynamism… may be increasing even as measured national dynamism decreases.” We shall see how things go, but on balance, look for human lives to continue to improve in the future. This will happen despite growing federal regulations, not because of them.

CEI’s Battered Business Bureau: The Week in Regulation

Regulators stepped up their pace last week, with nearly 80 regulations covering everything from defibrillators to Korean oranges.

On to the data:

  • Last week, 77 new final regulations were published in the Federal Register, after 40 new regulations the previous week.
  • That’s the equivalent of a new regulation every two hours and 11 minutes.
  • So far in 2015, 195 final regulations have been published in the Federal Register. At that pace, there will be a total of 2,438 new regulations this year, which would be far less than the usual total.
  • Last week, 1,583 new pages were added to the Federal Register, after 1,271 pages the previous week.
  • Currently at 5,440 pages, the 2015 Federal Register is on pace for 64,284 pages, which would be the lowest page count since 1992.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. Two such rules has been published so far this year, one in the past week.
  • The total estimated compliance cost of 2015’s economically significant regulations is $630 million for the current year.
  • Nineteen final rules meeting the broader definition of “significant” have been published so far this year.
  • So far in 2015, 41 new rules affect small businesses; five 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.

Ex-Im Bank as Revenue Generator?

Here’s a letter I wrote to the Pittsburgh Post-Gazette that appears in today’s paper:

 The Post-Gazette’s editorial board calls on Congress to reauthorize the Export-Import Bank because the agency supposedly nets the government a profit (“Save the Ex-Im Bank: A Frugal Congress Must Keep a Revenue Generator”).

This is misleading for two reasons.

First, Ex-Im’s self-reported profits are largely the result of creative accounting practices. A recent Congressional Budget Office study using industry-standard fair-value accounting rules (“Fair-Value Estimates of the Cost of Selected Federal Credit Programs for 2015-2024,” May 2014) found that Ex-Im loses an average of $200 million per year.

Second, even if Ex-Im did make a $675 million profit last year, this is less than two-tenths of 1 percent of last year’s $483 billion budget deficit.

If Ex-Im’s goal is to raise revenue, it is spectacularly ineffective.

Congress should let this corruption-enabling program expire and turn its attention elsewhere.

RYAN YOUNG
Fellow
Competitive Enterprise Institute
Washington, D.C.

The writer is author of the study “Ten Reasons to Abolish the Export-Import Bank.”

CEI’s Battered Business Bureau: The Week in Regulation

Even in a shortened work week due to Martin Luther King Day, federal agencies still put out 40 final regulations and more than 50 proposed regulations, covering everything from pet stores to drywall.

 

On to the data:

  • Last week, 40 new final regulations were published in the Federal Register, the same number as the previous week.
  • That’s the equivalent of a new regulation every four hours and 12 minutes.
  • So far in 2015, 118 final regulations have been published in the Federal Register. At that pace, there will be a total of 1,967 new regulations this year, which would be far less than the usual total.
  • Last week, 1,271 new pages were added to the Federal Register.
  • Currently at 3,857 pages, the 2015 Federal Register is on pace for 64,284 pages, which would be the lowest page count since 1992.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. One such rule has been published so far this year, none in the past week.
  • The total estimated compliance cost of 2015’s economically significant regulations is $477 million for the current year.
  • 12 final rules meeting the broader definition of “significant” have been published so far this year.
  • So far in 2015, 21 new rules affect small businesses; 4 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.

CEI’s Battered Business Bureau: The Week in Regulation

It was another slow week with just 40 new final regulations and 37 proposed regulations, but new rules still cover everything from solid waste to washing machines.

On to the data:

  • Last week, 40 new final regulations were published in the Federal Register.
  • That’s the equivalent of a new regulation every four hours and 12 minutes.
  • So far in 2015, 78 final regulations have been published in the Federal Register. At that pace, there will be a total of 1,773 new regulations this year, roughly half the usual total.
  • Last week, 1,119 new pages were added to the Federal Register.
  • Currently at 2,586 pages, the 2015 Federal Register is on pace for 58,773 pages, which would be the lowest page count since 1992.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. One such rule has been published so far this year, none in the past week.
  • The total estimated compliance cost of 2015’s economically significant regulations is $477 million for the current year.
  • 8 final rules meeting the broader definition of “significant” have been published so far this year.
  • So far in 2015, 13 new rules affect small businesses; 4 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.

CEI’s Battered Business Bureau: The Week in Regulation

Happy New Year to all of our regulatory followers! Wayne Crews previously summed up 2014’s year-end statistics in this post. Among the highlights are 3,541 new regulations, which by my calculations is equivalent to a new regulation every two hours and 28 minutes. Last year’s 79,978 Federal Register page count is also good for fifth-largest all time, going back to 1936.

The 2015 Federal Register already has more than a full week of data, with new rules ranging from heated pools to flying musical instruments. Despite a total page count that passed 1,000 pages in just the fourth issue, the numbers of proposed and final rules are both off to modest starts. Many rules are timed to take effect every New Year’s Day, and this staggered timing leads to frequent early-January slowdowns, so look for this to change before too long.

On to the data:

  • Last week, 29 new final regulations were published in the Federal Register, less than half the usual pace in recent years.
  • That’s the equivalent of a new regulation every five hours and 48 minutes.
  • So far in 2015, 38 final regulations have been published in the Federal Register. At that pace, there will be a total of 1,583 new regulations this year, less than half the usual total.
  • Last week, 1,326 new pages were added to the Federal Register.
  • Currently at 1,467 pages, the 2015 Federal Register is on pace for 61,125 pages, or nearly 19,000 pages less than last year. Look for this to change.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. One such rule has been published so far this year.
  • The total estimated compliance cost of 2015’s economically significant regulations is $477 million for the current year.
  • Three final rules meeting the broader definition of “significant” have been published so far this year.
  • So far in 2015, seven new rules affect small businesses; one of them is 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.