This Week in Ridiculous Regulations

COVID-19 cases are finally in decline as vaccinations continue, to the point where there is reason for cautious optimism. Congress was busy with a stimulus bill, which will apparently not include a $15 minimum wage. Agencies issued new rules ranging from lumber education to satellite service.

On to the data:

  • Agencies issued 123 final regulations last week, after 37 the previous week.
  • That’s the equivalent of a new regulation every one hour and 22 minutes.
  • With 499 final regulations so far in 2021, agencies are on pace to issue 3,372 final regulations this year. 2020’s total was 3,353 final regulations.
  • Agencies issued 87 proposed regulations in the Federal Register last week, after 13 the previous week.
  • With 270 proposed regulations so far in 2021, agencies are on pace to issue 1,824 proposed regulations this year. 2020’s total was 2,149 proposed regulations.
  • Agencies published 465 notices last week, after 384 notices the previous week.
  • With 3,307 notices so far in 2021, agencies are on pace to issue 22,345 notices this year. 2020’s total was 22,480.
  • Last week, 1,405 new pages were added to the Federal Register in a four-day week, after 1,005 pages the previous week.
  • With 11,845 pages so far, the 2021 Federal Register is on pace for 80,034 pages in 2021. The 2020 total was 87,352 pages. The all-time record adjusted page count (subtracting skips, jumps, and blank pages) is 96,994, set in 2016.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. There are two such rules so far in 2021, none from the last week. Agencies published five economically significant rules in 2020, and four in 2019.
  • The running cost tally for 2021’s economically significant rules ranges from net savings of $100.7 million to net costs of $362.5 million. The 2020 figure ranges from net savings of between $2.04 billion and $5.69 billion, mostly from estimated savings on federal spending. The exact numbers depend on discount rates and other assumptions.
  • Agencies have published nine final rules meeting the broader definition of “significant” in 2020, with one in the last week. This is on pace for 60 significant rules in 2021. 2020’s total was 79 significant final rules.
  • In 2021, 73 new rules affect small businesses. Two are classified as significant. 2020’s totals were 668 rules affecting small businesses, 26 of them significant.

Highlights from last week’s new regulations:

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

Federal Minimum Wage Hike will Force Cuts Elsewhere

This is a CEI press statement from February 26, 2021.

With the Democrat-controlled Congress aiming to imminently pass a plan to increase the federally-mandated minimum wage from $7.25 to $15 per hour nationwide as part of a $1.9 trillion Covid-related spending bill, CEI experts warn that foisting that labor cost increase on employers will force them to make painful cuts elsewhere.

Statement by Sean Higgins, CEI Research Fellow

The Raise the Wage Act will make the federal minimum wage $15 an hour because “fight for 15” is a catchy slogan, not because there is definitive economic research saying that is the optimal level to help the working poor. The best the legislation’s fans can say is that they don’t think $15 will hurt that much — evidence contradicted by the Congressional Budget Office report that the legislation will eliminate 1.4 million jobs. The workers who do keep their jobs would likely get fewer hours and benefits and face higher prices as employers adjust. Congress could do better if it asked, “How do we help ensure an economy that creates jobs paying more than the minimum wage?”

Statement by Ryan Young, CEI Senior Fellow

Congress should keep two things in mind about raising the federal minimum wage: regional differences and tradeoffs. Midtown Manhattan and rural Kansas have different costs of living. They should not have the same minimum wage. Second, the tradeoffs to minimum wages go beyond job losses. Workers also make non-wage pay, which employers will cut to offset some of the wage increase. That includes things like insurance, free food or parking, paid time off, and other perks. These non-wage cuts will reduce the impact of any wage increase.

Related:

Minimum Wages Have Tradeoffs: Unintended Consequences of the Fight for 15

The problem with a one-size-fits-all federal minimum wage hike

The Regional Differences Argument against a $15 Minimum Wage

The strongest political argument against increasing the federal minimum wage is the regional differences argument. Basically, while a $15 minimum wage might not be a big deal in an expensive place like New York or San Francisco, the tradeoffs would be much steeper in lower-cost places like small towns and rural areas. That tends to matter to politicians more than the usual economic arguments. Over in The Hill, I explain why the regional differences argument means there should be no federal minimum wage.

House members often represent heavily urban or heavily rural districts, so they don’t have to worry much about regional differences. Senators do, because they represent entire states. They have constituents in expensive big cities and constituents in lower-cost small towns. Something barely felt in downtown Chicago might not play as well in Peoria. This is one reason why minimum wage bills such as the Raise the Wage Act routinely pass the House yet stall in the Senate.

Regional differences are also why President Biden, whose constituency is the entire country, said that it “Doesn’t look like we can do it” about including a $15 minimum wage in the next COVID-19 spending bill.

The regional differences argument is in addition to the other problems with minimum wages. The tradeoff of higher wages is lower no-wage compensation, which includes cheaper insurance, fewer breaks, less vacation time, fewer resources put into better working conditions, and more.

Big companies such as Amazon and Costco already pay $15 minimum wages to their workers, yet favor it for their competitors, too. This is rent-seeking by using government to raise smaller competitors’ costs and lock in their own dominance. Minimum wages often act as a tax increase on lower-income workers. Their total compensation shifts toward higher taxable wages and lower untaxed benefits and perks. Even if their total compensation remains roughly unchanged, those extra taxes can mean a cut in take-home pay.

Read the whole thing here. For more arguments against minimum wage legislation, see my paper “Minimum Wages Have Tradeoffs.”

This Week in Ridiculous Regulations

It was a four-day week due to Washington’s Birthday (see my colleague John Berlau’s recent book, George Washington, Entrepreneur). The Perseverance rover landed on Mars, assisted by the first helicopter to ever fly in Mars’ thin atmosphere. Back on Earth, a major snow storm hit the Midwest and caused power outages in Texas. At least one senator fled the country almost as quickly as he fled from his principles about four years ago. Agencies issued new rules ranging from pipeline reviews to arts penalties.

On to the data:

  • Agencies issued 37 final regulations last week, after 54 the previous week.
  • That’s the equivalent of a new regulation every four hours and 33 minutes.
  • With 383 final regulations so far in 2021, agencies are on pace to issue 2,992 final regulations this year. 2020’s total was 3,353 final regulations.
  • Agencies issued 13 proposed regulations in the Federal Register last week, after 34 the previous week.
  • With 183 proposed regulations so far in 2021, agencies are on pace to issue 1,430 proposed regulations this year. 2020’s total was 2,149 proposed regulations.
  • Agencies published 384 notices last week, after 374 notices the previous week.
  • With 2,842 notices so far in 2021, agencies are on pace to issue 22,203 notices this year. 2020’s total was 22,480.
  • Last week, 1,005 new pages were added to the Federal Register in a three-day week, after 894 pages the previous week.
  • With 10,031 pages so far, the 2021 Federal Register is on pace for 80,711 pages in 2021. The 2020 total was 87,352 pages. The all-time record adjusted page count (subtracting skips, jumps, and blank pages) is 96,994, set in 2016.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. There are two such rules so far in 2021, none from the last week. Agencies published five economically significant rules in 2020, and four in 2019.
  • The running cost tally for 2021’s economically significant rules ranges from net savings of $100.7 million to net costs of $362.5 million. The 2020 figure ranges from net savings of between $2.04 billion and $5.69 billion, mostly from estimated savings on federal spending. The exact numbers depend on discount rates and other assumptions.
  • Agencies have published eight final rules meeting the broader definition of “significant” in 2020, none in the last week. This is on pace for 63 significant rules in 2021. 2020’s total was 79 significant final rules.
  • In 2021, 22 new rules affect small businesses. Two are classified as significant. 2020’s totals were 668 rules affecting small businesses, 26 of them significant.

Highlights from last week’s new regulations:

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

Marginal Thinking about Theories

Some wise advice from p. 26 of Armen Alchian and William Allen’s superb economics textbook Universal Economics (free PDF):

Don’t make the intellectual mistake of asking whether the theory (the set of principles) is “true.” No theory is perfect. Ask instead, “Is it useful and reliable enough for my purposes? That is, will it lead to generally correct implications and guidance at sufficiently low cost without intolerable error?” That’s the question to ask in every discipline, whether Chemistry, Physics, Biology, or Economics.

Besides being good common sense, this is an excellent example of thinking at the margin.

This Week in Ridiculous Regulations

Former President Trump’s impeachment trial was the big new story, though there is little suspense about the outcome. Meanwhile, agencies issued new rules ranging from Irish potatoes to lithographic printing.

On to the data:

  • Agencies issued 54 final regulations last week, after 53 the previous week.
  • That’s the equivalent of a new regulation every three hours and seven minutes.
  • With 346 final regulations so far in 2021, agencies are on pace to issue 3,089 final regulations this year. 2020’s total was 3,353 final regulations.
  • Agencies issued 34 proposed regulations in the Federal Register last week, after 23 the previous week.
  • With 170 proposed regulations so far in 2021, agencies are on pace to issue 1,518 proposed regulations this year. 2020’s total was 2,149 proposed regulations.
  • Agencies published 374 notices last week, after 392 notices the previous week.
  • With 2,458 notices so far in 2021, agencies are on pace to issue 21,946 notices this year. 2020’s total was 22,480.
  • Last week, 894 new pages were added to the Federal Register in a three-day week, after 920 pages the previous week.
  • With 9,432 pages so far, the 2021 Federal Register is on pace for 84,214 pages in 2021. The 2020 total was 87,352 pages. The all-time record adjusted page count (subtracting skips, jumps, and blank pages) is 96,994, set in 2016.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. There are two such rules so far in 2021, and none from the last week. Agencies published five economically significant rules in 2020, and four in 2019.
  • The running cost tally for 2021’s economically significant rules ranges from net savings of $100.7 million to net costs of $362.5 million. The 2020 figure ranges from net savings of between $2.04 billion and $5.69 billion, mostly from estimated savings on federal spending. The exact numbers depend on discount rates and other assumptions.
  • Agencies have published eight final rules meeting the broader definition of “significant” in 2020, none in the last week. This is on pace for 71 significant rules in 2021. 2020’s total was 79 significant final rules.
  • In 2021, 20 new rules affect small businesses. Two are classified as significant. 2020’s totals were 668 rules affecting small businesses, 26 of them significant.

Highlights from last week’s new regulations:

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

This Week in Ridiculous Regulations

The Senate passed the big budget reconciliation bill last week on a 50-50 tie broken by Vice President Harris. This week will see the impeachment trial of former President Trump over his role in inciting the January 6 insurrection at the Capitol. Meanwhile, agencies issued new rules ranging from government ethics fees to Super Bowl safety zones.

On to the data:

  • Agencies issued 53 final regulations last week, after 23 the previous week.
  • That’s the equivalent of a new regulation every three hours and 10 minutes.
  • With 288 final regulations so far in 2021, agencies are on pace to issue 3,130 final regulations this year. 2020’s total was 3,353 final regulations.
  • Agencies issued 23 proposed regulations in the Federal Register last week, after 2 the previous week.
  • With 136 proposed regulations so far in 2021, agencies are on pace to issue 1,478 proposed regulations this year. 2020’s total was 2,149 proposed regulations.
  • Agencies published 392 notices last week, after 312 notices the previous week.
  • With 2,084 notices so far in 2021, agencies are on pace to issue 22,652 notices this year. 2020’s total was 22,480.
  • Last week, 920 new pages were added to the Federal Register in a three-day week, after 789 pages the previous week.
  • With 8,536 pages so far, the 2021 Federal Register is on pace for 92,783 pages in 2021—again, this number will likely go down as the year goes on. The 2020 total was 87,352 pages. The all-time record adjusted page count (subtracting skips, jumps, and blank pages) is 96,994, set in 2016.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. There are two such rules so far in 2021. Agencies published five economically significant rules in 2020, and four in 2019.
  • The running cost tally for 2021’s economically significant rules ranges from net savings of $100.7 million to net costs of $362.5 million. The 2020 figure ranges from net savings of between $2.04 billion and $5.69 billion, mostly from estimated savings on federal spending. The exact numbers depend on discount rates and other assumptions.
  • Agencies have published seven final rules meeting the broader definition of “significant” in 2020, none in the last week. This is on pace for 76 significant rules in 2021. 2020’s total was 79 significant final rules.
  • In 2021, 17 new rules affect small businesses. Two are classified as significant. 2020’s totals were 668 rules affecting small businesses, 26 of them significant.

Highlights from last week’s new regulations:

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

Upcoming CEI Event: Bart Wilson on The Property Species

At noon ET on Thursday, February 11, CEI is hosting an event with the experimental economist Bart Wilson, author of The Property Species: Mine, Yours, and the Human Mind. He is also a frequent collaborator with former CEI Julian Simon Award winner Vernon Smith.

Near the end of The Property Species, on p. 194, Wilson shows how the custom of property is essential for natural conservation efforts (footnotes omitted):

When some people are allowed to say, “This elephant is mine,” they defend attacks against the elephant like they defend against attacks against their own person. In contrast, when government agents are tasked with defending elephants against attacks, they are not as effective—the evidence strongly suggests—in protecting elephants about which they cannot say, “These are mine.” Think about it natural-historically: Isn’t it astonishing that people who can say, “This elephant is mine” will protect and defend the life of a distantly related fellow mammal against members of their own species who wish that distant relative harm? Isn’t it furthermore prudent for such people to do so? And isn’t it then morally incumbent upon us to consider the possibility that property can save elephants from extinction? Consider, for the moment, the beautiful and humane thoughts made possible by mine.

CEI has a long history of supporting private conservation, and here Wilson makes a powerful point in its favor.

Wilson also discusses other concepts in the book, such as his view that property is not a right; it is a custom. This view avoids some of the problems of rights theory while emphasizing property’s inherently social and cooperative nature.

Property, Wilson argues, is not just the ability to say “this is mine.” Any dog with a bone thinks that. Property is the ability to also say “that is yours.” Dogs do not have that ability. Only humans have made this cognitive leap. Property is unique to us. It is also universal among us. Every society on Earth, without exception, has social customs that involve notions of both “this is mine” and “that is yours.” This human universal is what makes non-violent trade possible. Property is what lets people act on Adam Smith’s natural propensity to truck, barter, and exchange.

As Wilson argues on p. 179, “we have to be open to the possibility that commerce may be an integral part of that socializing and ethicizing process.” Property is a fundamental concept in designing sound public policy, and in enabling virtuous and prosperous societies to emerge. There is much more to property than armchair philosophizing.

There is also more to property than commerce. The custom of property gives a convincing answer to the question that all social scientists seek to answer: how people find ways to get along with each other. Many people view property as an exclusionary, anti-social concept. This is a mistake. It requires multiple people for the concept of property to even exist. And those people must cooperate with each other for it to work. It does no good to say “this is mine” if other people do not agree to respect that, and expect to have their own claims respected.

Property is an ongoing dialogue between people. it requires listening, not just speaking. There is a reason why economics and related disciplines–nearly all of which Wilson draws from in the book–are called social sciences.

Wilson, of course, has much more to say on the matter. Click here to register for the February 11 event. The book is here. I highly recommend both.

Proposed European Tech Regulations Will Backfire, Badly

The European Union recently proposed two major tech regulation bills aimed at America’s tech industry, the Digital Markets Act (DMA) and the Digital Services Act (DSA). While American antitrust law is flawed, European competition policy is arguably more so. On purpose or not, DMA/DSA would add trade barriers in a world that already has too many. They are costly. And they won’t increase competition. In fact, they would help to lock in the big U.S. companies’ dominance.

How would they do this? They would block self-preferencing, such as Amazon promoting self-branded products in its search results, or Google and Apple giving their own apps special treatment in their app stores. Retailers and grocery stores already have been doing this for the last century or so, and those markets are highly competitive. It is no different when a company does the same thing online.

Companies would face stricter content moderation policies. If the EU says to take down certain content, companies would have a short time frame to either remove it or be fined. European companies would not face these same compliance costs, presumably giving them a leg up, though without improving their products.

Tech platforms would be liable for user-posted content, rather than the users themselves. This essentially copies President Trump’s position in the Section 230 controversy. Besides chilling speech, this would give popular services a reason to avoid the European market. It would also lock in dominant players. Facebook can afford to hire armies of content moderators, but startup competitors cannot. Repeat offenders risk fines of up to 10 percent of global revenue.

Breaking up companies is another option, though the practical politics of the EU breaking up a U.S.-based company likely make this unrealistic.

Unlike most legislation, DMA/DSA would not apply to everyone. They would only apply to “gatekeepers,” a new term defined in just such a way that it applies only to a handful of major U.S. tech companies. In practice, DMA/DSA is simple extraction from successful companies, without proof of consumer harm.

Swiss competition commissioner Henrique Schneider argues in a recent Competitive Enterprise Institute paper that, even if that EU officials understand basic economics—no sure thing—they “choose to disregard it in order to advance two political aims—protectionism and consumer welfare (as they conceive the latter).” And, as he predicted, things are getting worse.

Beyond Spotify, it is hard to even name a major European tech company. This is not for a lack of talent and good ideas in Europe. It is because of a broken regulatory culture that prefers tearing down over building up. Taking foreigners down a notch is very different from allowing homegrown entrepreneurs to build and innovate.

DMA/DSA is trade protectionism under another name. U.S.-EU trade relations are already strained because of President Trump’s misguided trade war, Europe’s equally misguided retaliation, and a long-running dispute over subsidies to Boeing and Airbus. President Biden is likely to further raise trade barriers, as my colleague Iain Murray points out. Some kind of major U.S.-EU trade agreement is likely necessary in the next few years as a diplomatic and economic counterweight against China. DMA/DSA would aggravate tensions between allies at precisely a point when they can be somewhat smoothed.

Finally, DSA/DMA wouldn’t actually take down the big American companies, but lock in their dominance. They can afford massive fines and compliance costs; smaller startups can’t. And if a smaller competitor nears the threshold of becoming a “gatekeeper,” it may decide to stay small on purpose, leaving most of the market to big incumbents. This would harm consumers, who would pay more to have fewer choices and lower-quality services.

If the DMA/DSA bills are enacted—no sure thing—it will be a long process. According to CNBC, Margrethe Vestager, the EU’s top competition policy official wants them enacted “as fast as possible,” meaning about two years. More realistically, the process will be delayed by tech company lobbying efforts and squabbles between Brussels and the EU’s 27 national governments. By then, the tech market will likely look very different.

If the Digital Markets Act and the Digital Services Act are accurate statements of where EU regulators stand on tech policy and innovation, then Europe’s tech sector will remain second-class. Along the way EU regulators would make global trade less free, help to lock in today’s big tech companies’ dominance, and harm consumers around the world.

This Week in Ridiculous Regulations

As the new administration settles in, it appears they will continue many Trump administration policies, such as “Buy American” provisions and trade protectionism. Meanwhile, agencies issued new rules ranging from security bars to aluminum imports.

On to the data:

  • Agencies issued 23 final regulations last week, after 46 the previous week.
  • That’s the equivalent of a new regulation every seven hours and 18 minutes.
  • With 235 final regulations so far in 2021, agencies are on pace to issue 3,264 final regulations this year. 2020’s total was 3,353 final regulations.
  • Agencies issued 2 proposed regulations in the Federal Register last week, after 27 the previous week.
  • With 113 proposed regulations so far in 2021, agencies are on pace to issue 1,569 proposed regulations this year. 2020’s total was 2,149 proposed regulations.
  • Agencies published 312 notices last week, after 312 notices the previous week.
  • With 1,692 notices so far in 2021, agencies are on pace to issue 23,500 notices this year. 2020’s total was 22,480.
  • Last week, 789 new pages were added to the Federal Register in a three-day week, after 1,949 pages the previous week.
  • With 7,614 pages so far, the 2021 Federal Register is on pace for 105,750 pages in 2021—again, this number will likely go down as the year goes on. The 2020 total was 87,352 pages. The all-time record adjusted page count (subtracting skips, jumps, and blank pages) is 96,994, set in 2016.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. There are two such rules so far in 2021. Agencies published five economically significant rules in 2020, and four in 2019.
  • The running cost tally for 2021’s economically significant rules ranges from net savings of $100.7 million to net costs of $362.5 million. The 2020 figure ranges from net savings of between $2.04 billion and $5.69 billion, mostly from estimated savings on federal spending. The exact numbers depend on discount rates and other assumptions.
  • Agencies have published seven final rules meeting the broader definition of “significant” in 2020, none in the last week. This is on pace for 97 significant rules in 2021. 2020’s total was 79 significant final rules.
  • In 2021, 13 new rules affect small businesses. Two are classified as significant. 2020’s totals were 668 rules affecting small businesses, 26 of them significant.

Highlights from last week’s new regulations:

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