This Week in Ridiculous Regulations

CEI announced that renowned development economist William Easterly will receive its 2021 Julian Simon Award at a two-day event in Washington, D.C., on September 21 and 22. President Biden issued an Executive Order on competition, while new Federal Trade Commission chair Lina Khan took several measures to increase her agency’s antitrust activity. Meanwhile, agencies issued new rules ranging from aquatic plant control to yak inspections.

On to the data:

  • Agencies issued 75 final regulations last week, after 48 the previous week.
  • That’s the equivalent of a new regulation every two hours and 15 minutes.
  • With 1,732 final regulations so far in 2021, agencies are on pace to issue 3,231 final regulations this year. 2020’s total was 3,218 final regulations.
  • Agencies issued 21 proposed regulations in the Federal Register last week, after 27 the previous week.
  • With 1,109 proposed regulations so far in 2021, agencies are on pace to issue 2,069 proposed regulations this year. 2020’s total was 2,021 proposed regulations.
  • Agencies published 355 notices last week, after 342 notices the previous week.
  • With 11,753 notices so far in 2021, agencies are on pace to issue 22,112 notices this year. 2020’s total was 22,480.
  • Last week, 1,405 new pages were added to the Federal Register, after 1,099 pages the previous week.
  • The average Federal Register issue this year contains 283 pages.
  • With 37,889 pages so far, the 2021 Federal Register is on pace for 70,702 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 22 final rules meeting the broader definition of “significant” in 2021, with one in the last week. This is on pace for 41 significant rules in 2021. 2020’s total was 79 significant final rules.
  • In 2021, 366 new rules affect small businesses. Seven are classified as significant. 2020’s totals were 668 rules affecting small businesses, 26 of them significant.

Highlights from last week’s new regulations:

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

Green Protectionism on the Rise?

The $3.5 trillion budget proposal that the Democratic leadership in Congress is putting together will reportedly include the world’s first carbon tariffs, which are added to goods coming from countries that do not meet certain environmental regulatory standards. The only difference from Trump-era trade policy is the green packaging.

It is far from a sure thing that the carbon tariffs will be enacted; proposed budgets never get enacted in their original form, and it is still early in the process. As The New York Times reports, “Democrats released no details about their tax proposal on Wednesday. Calling it simply a ‘polluter import fee,’ the framework does not explain what would be taxed, at what rate or how much revenue it would expect to generate.”

Given how the vagueness of the proposal at this point, it is possible that it was leaked in part to gauge public reaction. That reaction should be negative.

Carbon tariffs of any kind would have practical difficulties. One is retaliation. Every time we raise our tariffs, our trading partners raise theirs in return. It happened with the Smoot-Hawley tariffs during the Great Depression, and it happened more recently with each new round of the Trump tariffs. A Biden carbon tariff would almost certainly have the same reaction.

A second problem is the timing. The economy is still recovering from a pandemic. Industries that might be hit include automobiles, which use gasoline and steel; construction, which uses steel and lumber; and smartphones and tablets, which use rare earth elements.

Automakers are already facing a supply crunch, in part because existing trade policies limit their options for semiconductor chips. Housing prices are at record highs. Everyone from students to gig workers would benefit from more affordable smartphones and tablets. Just as the highest inflation in 13 years is pushing those prices up, carbon tariffs would push them even higher.

Right now, the economy needs renewal and resilience. Consumers and businesses would benefit from a renewed commitment to free trade that fixes that last administration’s mistakes. And supply networks would be more resilient against future crises if they had fewer obstacles blocking goods from getting to where they are needed. More deficit spending and the same old trade protectionism will not help the recovery.

A third problem is cronyism. From domestic companies’ perspective, Washington is offering to raise their competitors’ costs for them. This would allow American companies to raise their prices without having to improve their products. As long as a carbon tariff proposal remains a live idea, Washington lobbyists will be making a lot of money—as will the campaign coffers of influential members of Congress. The scramble will be even more intense for as long as it is unknown which industries will be affected, as industries lobby to get themselves shielded from competition.

The list goes on. Diplomatic efforts that could be spent building counterweights to Chinese and Russian illiberalism would instead be spent fighting with allies. The World Trade Organization’s dispute resolution system, currently being rebuilt almost from scratch, would be clogged up with years of avoidable litigation, echoing the long-running Boeing-Airbus dispute between America and the European Union. Upcoming trade agreement negotiations with the European Union, the United Kingdom, and others would become more difficult.

In short, carbon tariffs have substantial costs and almost no benefit—carbon emission reductions, if any, would be too small to have a measurable effect on climate. Nor would there be a reliable way to measure those reductions, if any were to happen. Even if the policy were to work as intended, nobody would be able to tell.

There is still time for Democratic leadership to walk this one back. Rather than make terrible Trump-era trade policies even worse, Congress and President Biden should pursue an agenda of liberalization. Several ideas for one are in the trade chapter of CEI’s most recent Agenda for Congress.

This Week in Ridiculous Regulations

It was a four-day workweek after Independence Day. Google received its fourth antitrust lawsuit and President Biden issued a major executive order intended to replace corporate dominance with Washington’s. Whatever the intentions, the result of these things is usually cronyism and regulatory capture. Meanwhile, agencies issued new rules ranging from handwritten signatures to rental reporting.

On to the data:

  • Agencies issued 48 final regulations last week, after 73 the previous week.
  • That’s the equivalent of a new regulation every three hours and 30 minutes.
  • With 1,657 final regulations so far in 2021, agencies are on pace to issue 3,211 final regulations this year. 2020’s total was 3,218 final regulations.
  • Agencies issued 27 proposed regulations in the Federal Register last week, after 55 the previous week.
  • With 1,088 proposed regulations so far in 2021, agencies are on pace to issue 2,109 proposed regulations this year. 2020’s total was 2,021 proposed regulations.
  • Agencies published 342 notices last week, after 482 notices the previous week.
  • With 11,398 notices so far in 2021, agencies are on pace to issue 22,112 notices this year. 2020’s total was 22,480.
  • Last week, 1,099 new pages were added to the Federal Register, after 1,527 pages the previous week.
  • The average Federal Register issue this year contains 283 pages.
  • With 36,482 pages so far, the 2021 Federal Register is on pace for 70,702 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 21 final rules meeting the broader definition of “significant” in 2021, with two in the last week. This is on pace for 42 significant rules in 2021. 2020’s total was 79 significant final rules.
  • In 2021, 345 new rules affect small businesses. Seven are classified as significant. 2020’s totals were 668 rules affecting small businesses, 26 of them significant.

Highlights from last week’s new regulations:

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

Relevant Markets, A Dozen Keystrokes, and the Google Play Store Antitrust Lawsuit

Yesterday, after markets closed, 36 state attorneys general announced another antitrust lawsuit against Google. This complaint centers around Google’s Play Store, in which it often charges developers a 30 percent commission. The text of the complaint is now available, and it has some problems. One of them involves yet another poorly defined relevant market, which excludes Apple’s iOS. Another problem is that it is easy for developers and consumers to avoid the Play Store and its commissions.

Regulators often say that a company dominates an unrealistically narrow market segment, then say this is proof of monopoly. This is the relevant market fallacy. For example, Sirius-XM has a monopoly on the satellite radio market. But this doesn’t matter because that narrow market competes in a far larger marketplace against traditional radio, podcasts, audio books, streaming services like Spotify, and more. Regulators allowed Sirius and XM to merge back in 2008.

More recently, two antitrust lawsuits against Facebook were dismissed in part because prosecutors intentionally excluded direct Facebook competitors such as Twitter and TikTok from their relevant market definition.

The relevant market fallacy also appears in the new Google Play Store case. Starting on page 19, the complaint argues that Google Android has a monopoly in the market for “Licensable Mobile Operating System[s].” A rule of thumb is that if a case refers to its relevant market using a boutique term that is not in common use, there is often some trickery involved.

On page 20, this turns out to be exactly what is happening. The complaint’s definition of “Licensable Mobile Operating System” specifically excludes Google’s main competitor, Apple’s iOS.

This is like arguing that a company has a monopoly, if only you ignore the competition.

The complaint is also vulnerable to the dozen keystrokes argument—alternatives are often just a dozen or so keystrokes away. On page 22, the complaint notes that consumers use the Google Play Store for “well over 90%” of Android app downloads. For the sake of argument, assume this is correct. If developers and consumers want to avoid the Google Play Store, they can:

  • Download an app directly from a developer’s website;
  • Use Amazon’s app store;
  • Use Samsung’s app store (preinstalled on Samsung phones); or
  • Buy video games from a different distributor, such as Steam.

Developers who want to avoid the Google Play Store should steer consumers to those options. If they take Google’s 30 percent commission and instead spend it on advertising, press outreach, and awareness campaigns—or build their own app store with lower commissions—they might end up with some combination of cost savings, lower prices, and boosted sales.

Even as things stand now, consumers do not have to go to much trouble to find alternatives or build new habits. If they take a chance, they just might succeed.

This happened before with Microsoft’s Internet Explorer, which went from an 85 percent market share to a 1 percent market share despite it being the default Windows option the whole time. Just as Firefox, Google Chrome, and other browsers take just a few keystrokes to find and install, app store alternatives are readily available. Prosecutors arguing that this cannot happen again are on weak ground.

Google’s Play Store does have some conveniences, for both developers and consumers. There is a centralized payment system and near-automatic installation for consumers. A ratings system helps consumers quickly figure out their best options, while boosting sales for developers who make quality apps. Having thousands of apps in one, searchable place also makes it easier for consumers to find what they want, and for developers to be found.

Maybe this is worth the 30 percent commissions, and maybe it isn’t. The answer is different for each developer and each consumer. But the ease of alternatives and the breadth of the relevant market make it difficult to prove consumer harm.

My colleagues and I will have more to say about this case later. For now, the complaint does not appear to be well argued, falling for both the relevant market fallacy and the dozen keystrokes argument.

A Sustained Recovery Needs a Deregulatory Stimulus

Over in The Hill, Wayne Crews and I argue that more deficit spending won’t help the COVID recovery. Regulatory reform is more powerful stimulus and won’t increase the deficit. It will also leave both the private and the public sector more resilient against the next crisis:

Trump’s failure to engage Congress was a massive missed opportunity, especially since his party held a majority in both chambers of Congress for his first two years. The regulatory “tax” is at least as significant as the fiscal tax reform he emphasized. Had Congress codified “Trumpian” reforms in legislation—and GOP members had introduced several bills to do so (and have even done so again, with greater futility, in the Biden era)—they would still be in place.

Now, as the recovery from COVID and the political reaction to it continues, regulatory relief would be a potent economic stimulus that would not add to the deficit like everything else that was and is being pursued, such as Biden’s costly and interventionist jobs and families plans. 

The just-released 2021 edition of the Competitive Enterprise Institute’s annual Ten Thousand Commandments report pegs regulatory costs at least $2 trillion per year—more than twice the total cost of the infrastructure spending bill the House passed last Thursday.

Read the whole thing here. See also the just-released 2021 edition of Wayne’s Ten Thousand Commandments report.

On the Radio: Economic Recovery and Regulation

This morning, I was on the Tampa, FL-based Freedom Works show with Paul Molloy to talk about June’s jobs report and how vaccinations and regulatory reform can keep the COVID recovery going strong. The 10-minute segment is somewhere in this podcast version of the show.

Tomorrow, July 7, I’ll be on the Lars Larson Show at about 7:15 PM ET to talk about the new Ten Thousand Commandments report.

This Week in Ridiculous Regulations

The CEI community mourned the loss of Steve Horwitz, a principled classical liberal, a fine economist, and an even finer person. We’ll miss you, Steve. Meanwhile, agencies issued new rules ranging from space launch spectrum to truck driver training.

On to the data:

  • Agencies issued 73 final regulations last week, after 82 the previous week.
  • That’s the equivalent of a new regulation every two hours and 18 minutes.
  • With 1,609 final regulations so far in 2021, agencies are on pace to issue 3,200 final regulations this year. 2020’s total was 3,218 final regulations.
  • Agencies issued 55 proposed regulations in the Federal Register last week, after 41 the previous week.
  • With 1,061 proposed regulations so far in 2021, agencies are on pace to issue 2,122 proposed regulations this year. 2020’s total was 2,021 proposed regulations.
  • Agencies published 482 notices last week, after 437 notices the previous week.
  • With 11,056 notices so far in 2021, agencies are on pace to issue 22,112 notices this year. 2020’s total was 22,480.
  • Last week, 1,527 new pages were added to the Federal Register, after 1,489 pages the previous week.
  • The average Federal Register issue this year contains 283 pages.
  • With 35,378 pages so far, the 2021 Federal Register is on pace for 70,762 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 21 final rules meeting the broader definition of “significant” in 2021, with two in the last week. This is on pace for 42 significant rules in 2021. 2020’s total was 79 significant final rules.
  • In 2021, 332 new rules affect small businesses. Seven are classified as significant. 2020’s totals were 668 rules affecting small businesses, 26 of them significant.

Highlights from last week’s new regulations:

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

On the Radio: Ten Thousand Commandments

I was recently on the Mark Reardon Show on KFTK in St. Louis to talk about CEI’s new Ten Thousand Commandments report.

The audio is here, and starts about 23 minutes in.

Government Can Further Jobs Gain By Continuing to Ease Restriction and Not Spending

This news release was originally posted at cei.org.

The economy added 850,000 jobs in June, according to newly released numbers by the Labor Department. That exceeds the anticipated number of 700,00. And the biggest gains were in the leisure and hospitality sector. What can government do to help with even bigger gains as the economy continues pandemic recovery? CEI experts offer advice.

Ryan Young, CEI Senior Fellow:

“June’s jobs report is fresh evidence that the COVID economic recovery does not need more government spending. It needs more vaccinations and fewer regulatory obstacles. The boom in leisure and hospitality jobs shows that vaccination rates are now high enough for many people to feel safe going to events and summer vacations that last year would have been extremely dangerous. Deficit spending is already at a record high, and there is no need to add to it further. Policymakers should instead lighten permit and paperwork burdens, lower trade barriers, and allow easier access to capital so new businesses can start up, and existing businesses can adapt to the new conditions.”

Sean Higgins, CEI Research Fellow:

“June’s gain of 850,000 jobs can largely be attributed to the continued rollback of state and federal restrictions related to the Covid-19 epidemic. The Labor Department found that 6.2 million people reported in June that they were unable to work because their employer was closed or lost business due to the pandemic, down from 7.9 million reporting the same problem in May. The biggest gains were seen in the leisure and hospitality industry (343,000 jobs) and public and private education (269,000 jobs) both reflecting trends of people getting out of their homes and back out in public. The data shows that best remedy for the economy is to simply let it heal itself by having government get out of the way.”

CEI Supports Sen. Rick Scott and Rep. Byron Donald’s New Regulatory Reform Bill to Prune Unneeded Rules

This news release was originally posted at cei.org.

WASHINGTON – Sen. Rick Scott (R-FL) recently introduced S. 2239, the Unnecessary Agency Regulations Act of 2021, a law that would require the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) to identify new regulations each year that are obsolete, redundant, or burdensome, and to send Congress a list of such rules to consolidate or remove. The bill also requires Congress to actually act on those recommendations. The House version, H.R. 4132, was introduced this week by Rep. Byron Donalds (R-FL).

CEI senior fellow Ryan Young said:

“As we emerge from the COVID-19 pandemic, America needs both short-term recovery and long-term resilience. The Unnecessary Agency Regulations Act of 2021 contributes to both. In the short term, a regulatory housecleaning will help new businesses start up more smoothly, and help existing businesses hire employees and grow again. In the long run, regular pruning of redundant, obsolete, and burdensome rules will help keep agencies and businesses resilient against the next crisis.

“Trillions of dollars of politically motivated infrastructure and stimulus spending will not help the COVID recovery. It will simply take money away from some projects and put it into other projects instead. A deregulatory stimulus, of which this bill should be a part, would make it easier for people to create new opportunities and new wealth, without adding to the deficit.”

CEI Vice President for Policy Wayne Crews said:

“As a hidden tax that rivals the explicit one we deal with every April 15, the burdens of federal regulation require far greater disclosure than is currently required and a mechanism to slow down the constant flow of new rules.  Some 3,000 rules and regulations appear annually in the Federal Register, and, minus aberrations like former president Donald Trump’s one-in, two-out campaign, little or no rollback happens. One gauge of regulation we get, OMB’s Report to Congress on Regulatory Costs and Benefits, is chronically months or years late and hopelessly incomplete when it does show up. Another disclosure tool, the twice-yearly Unified Agenda of Federal Regulatory and Deregulatory Actions, ostensibly presents agency regulatory priorities but is non-binding. While administrative state supporters will inevitably fret that OMB lacks the necessary staff to identify redundant, burdensome and obsolete rules – let alone make recommendations regarding them in the Agenda. The Unnecessary Agency Regulations Act from Sen. Rick Scott points out what must be done in tomorrow’s amplified regulatory disclosure. If OMB cannot be allowed to suffer, neither can an over-regulated public. The solution is to reduce regulation, not ignore its volume as it flies by.”

More CEI resources on regulatory reform:

Inside Sources op-ed: How to Stimulate the Economy without Trillions in New Spending

CEI Study: How to Make Sure Reformed #NeverNeeded Regulations Stay That Way: Reform the Rulemaking Process, Not Just the Rules

CEI’s Agenda for Congress: Regulatory Reform

Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State