Category Archives: #NeverNeeded

Out Now: The 2020 Edition of Ten Thousand Commandments

The 2020 edition of Ten Thousand Commandments is out. Wayne Crews’s annual report gives a big picture view of the federal regulatory state. There has long been annual a federal budget for spending, but government regulations have no equivalent. Ten Thousand Commandments attempts to fill that gap until policy makers decide to follow basic transparency guidelines. Among the highlights:

  • In total, federal regulations cost an estimated $1.9 trillion per year. This “hidden tax” is greater than corporate and personal income tax revenues combined. If the cost of federal regulations were a national economy, it would be the world’s eighth largest, behind Italy and ahead of Brazil. This does not include state and local burdens.
  • That is equivalent to $14,455 per household That amounts to 18 percent of the average pre-tax household budget and exceeds every other item except housing.
  • Agencies published 2,964 new final regulations in 2019. This is the first year with fewer than 3,000 new regulations since records began being kept in 1976. However, agencies also listed 3,752 upcoming rules in the most recent twice-yearly Unified Agenda.
  • When regulatory outlays are combined with 2019’s $4.447 trillion in spending, the federal government alone takes up 30 percent of the economy.
  • Congress passed 105 bills in 2019, compared to 2,964 regulations. This means federal agencies issued 28 regulations for every bill passed. This “Unconstitutionality Index” almost exactly matches the historical average for the last decade.
  • The five agencies issuing the most rules are the Departments of Commerce, Defense, Health and Human Services, Transportation, and the Treasury.
  • Addressing the coronavirus crisis and the upcoming economic recovery will take more than spending. Regulatory reform is a crucial part of the agenda. Congress, agencies, and the president need to continue waiving regulations that are blocking access to health care and medical supplies and are preventing businesses from getting back on their feet once safety allows. They must also enact systemic reforms to prevent today’s regulatory bloat from hindering future crisis responses. President Trump must also ignore his regulatory impulses on issues like antitrust, social media and technology, infrastructure, trade restrictions, telecommunications, food and drugs, subsidies, and more.
  • 199,471 Federal Register pages in Trump’s first three years. That averages 66,490 pages per year. President Obama averaged 80,420 pages per year.

These numbers are especially alarming during the coronavirus pandemic. Some of those rules prevent sick people from accessing health care, make schooling more difficult, prevent people from working from home, and make it harder for small businesses to adapt to the new circumstances or find the funding they need to stay afloat. Ten Thousand Commandments, if anything, puts into stark relief the points CEI’s #NeverNeeded campaign is making.

The full report is here. For a shorter version, see the news release. Further reform ideas are at neverneeded.cei.org.

Trump’s Executive Order on #NeverNeeded Regulations

Over at National Review, I take a look at President Trump’s new Executive Order directing agencies to get rid of #NeverNeeded regulations:

Waiving regulations can take months or even years, even when they are clearly harmful. Trump’s new executive order is a start. It encourages agencies to use whatever emergency powers they have to speed along the cleanup process. Unfortunately, many drastic regulations are passed during emergencies, from unconstitutional national-security and surveillance policies to bailouts for favored big businesses. But fortunately, regulations can also be removed that way. We have a choice. The famous “ratchet effect” of government’s grabbing power during a crisis and keeping it afterward does not have to be an iron law.

Read the whole piece here. Kent Lassman and Wayne Crews made statements about the Executive Order here. Wayne Crews also wrote about it for Forbes. More reform ideas are at neverneeded.cei.org.

On the Radio: Deregulation Executive Order

Today at 2:30 PT, I will appear on the Lars Larson show to talk about President Trump’s recet Executive Order encouraging agencies to permanently repeal #NeverNeeded regulations waived during the coronavirus response.

Time for a Federal Price Gouging Law?

Amazon’s vice president of public policy, Brian Huseman, calls for a federal price gouging law in a recent post over at Amazon’s in-house blog. This is a bad idea for several reasons.

One is that there are already effective ways to reduce price gouging without regulation. At Amazon, Huseman writes, “We deploy dynamic automated technology to proactively seek out and pull down unreasonably priced offers, and we have a dedicated team focused on identifying and investigating unfairly priced products that are now in high demand, such as protective masks and hand sanitizer.”

This should be a competitive selling point for Amazon, not a call for more regulation. Regulations, remember, are made by the government we have, not the government we want. Amazon’s technology and in-house policies are almost certainly more effective than what Donald Trump, Nancy Pelosi, or Mitch McConnell would enact during an election year and a pandemic. Company-level policies are also more adaptable than federal-level policies as technology and circumstances change.​

In fact, if Amazon isn’t already doing so, it could license or sell its anti-price gouging technology to competitors for a profit. Price gouging is unpopular, and companies that fight against it look good to customers. Amazon does not need federal regulations to force this business opportunity into being.

Looking at price gouging legislation from Amazon’s perspective, but without the public relations filter, they stand to gain three things from a federal price gouging law:

  1. Regulatory certainty. One federal standard is easier to follow than dozens of state standards.
  2. Liability protection. Amazon will face fewer price gouging lawsuits if the company is cooperative with legislators, or even has a hand in crafting the rules.
  3. Rent-seeking, which is economists’ term for using government for unfair advantage. Price gouging legislation is a way for Amazon to raise rivals’ costs without having to improve its own offerings. Amazon has already invested in artificial intelligence algorithms (AI) and in enforcing guidelines for its third-party sellers. Many of Amazon’s competitors have not, especially the smaller ones.

There is something to be said for the first two items, though there are also arguments against them. But the third item, rent-seeking, is anti-competitive behavior at its worst. One of the primary reasons CEI opposes antitrust regulation, for example, is that antitrust regulations themselves are a major rent-seeking opportunity. Big companies routinely game the rules to thwart competition. Price gouging legislation is another example of the same rent-seeking process. These initiatives happen when companies compete in Washington, rather than the marketplace.

Other Factors

Amazon’s call for a price gouging bill might be part of a larger effort to get itself out of antitrust crosshairs. Ironically, such a bill would make retail less competitive. Not only would Amazon raise rivals’ costs, legislation would prevent companies from competing with each other to offer price gouging policies their customers most prefer.

The timing is as bad as the idea itself. Retail sales declined by 16.4 percent in the month of April, the worst ever recorded—for the second month in a row. Retailers have enough to deal with without having to spend resources complying with new rules their competitor helped to write.

There is a federalism angle, as well. A federal rule would impose standards on more than a dozen states that intentionally refuse them.

Prices Are More than Money

As any good economist will tell you, money isn’t everything. Prices are a lot more than money. Every good has a mix of both money and non-money prices. Price gouging legislation is ultimately ineffective because it only reduces ­money prices during a crisis. Tamping down on those means more severe non-money price increases. These cannot be legislated away.

A high money price causes people who don’t urgently need toilet paper or hand sanitizer to hold off until later, when the price goes back down. That leaves more left over for people who need it now. This matters a great deal during an emergency. On the other side of the equation, that same money price increase also induces producers and distributors to go the extra mile, often literally.

What about non-money prices? One example of a non-money price is when a good becomes harder to find. You might have to drive to a store further away or do some deep digging online for some potentially shady sources. Queuing and waiting lists emerge or shipping times might take longer. These things don’t cost money, but they still have a price. They are not measured in dollars, but in wasted time, extra hassle and stress, and lost opportunities. These non-money price increases leave people with less time left over for other things such as job searches, home schooling, or even taking some time for self-care.

Shortages will happen during a crisis. That is unavoidable. The question is how to deal with them. Just as pushing on a balloon doesn’t change how much air is in it, squeezing down on money prices with a price gouging regulation doesn’t actually do anything to stop price increases. It mostly just redirects them to non-money areas.

What is the correct mix of money- and non-money prices? That is a subjective value judgment. There is no truly right or wrong answer, which is another reason why federal price gouging legislation is bad policy.

Public opinion is pretty well set against price gouging. Importantly, though, most anti-price gouging activists have likely not considered the tradeoffs they would pay in steeper non-money prices. Some of them would likely change their mind if they did. Pollsters should find out. Corporate PR departments would likely change their tune quite a bit based on the results.

Federal price gouging legislation would not stop price increases or alleviate shortages. It would sharply increase non-money prices during emergencies and drive some economic activity into black markets. Companies can set their own price gouging policies without regulation, as Amazon has proven with a mix of AI and sanctions against violating sellers. The rent-seeking aspect of potential price gouging legislation is worth considering for people concerned about business ethics and about large companies gaining an unfair advantage over smaller rivals.

In short, a price gouging bill is #NeverNeeded. Congress has already passed enough harmful flash policy. There’s no need for still more.

April Pandemic-Caused Unemployment Rate Underscores Urgency of Getting Rid of #Neverneeded Regulations

The following is a press release originally posted at cei.org:

CEI senior fellow Ryan Young indicated that April’s 14.7 percent unemployment rate was unsurprising and will probably continue in May. He called on policymakers to keep deregulating as a prime way of helping people.

“The best thing policy makers can do is to waive regulations that prevent people from picking up the pieces. Businesses will need easier access to loans, crowdfunding, and other financing than they have now. Occupational licenses that keep out new workers in order to protect existing businesses are, in many cases, more harmful now than ever. Months-long permit processes that prevent businesses from adapting to the new conditions must be eased and sped up. A great deal of economic pain is inevitable right now. Congress, the President, and the states should act immediately to minimize the unnecessary self-inflicted pain that regulations are causing right now.”

For a list and discussion on #neverneeded regulations, visit neverneeded.cei.org/.

 

Trump Defers Tariff Payments for Struggling Businesses: A Good Start, More Needed

President Trump has deferred selected tariff payments for companies experiencing coronavirus-related hardship. U.S. Customs issued a press release here and the temporary final rule appeared in the April 22 Federal Register. It came after more than two weeks of starts, stops, denials, reversals, and at least one accusation of “fake news” from the president. This indicates that trade policy is still an area of uncertainty and not something rebuilding businesses can plan around—potentially endangering post-virus economic recovery.

The deferrals are better than nothing. But it is important not to oversell them. Here is a bit of context on the impact they are likely to have:

  • They are deferrals, not exemptions. U.S. producers will still pay all affected tariff duties, just 90 days later. Because of this, companies have no reason to reduce prices for consumers.
  • The deferrals are only for imports made in March and April—precisely when imports significantly slowed. That limits their usefulness in buying time for cash-strapped businesses.
  • None of the Trump tariffs from 2017 onwards are eligible for deferrals. Since Trump has roughly doubled tariffs, this means about half of all tariffs are not eligible for deferred payment. That includes the steel and aluminum tariffs, the China tariffs, and other recent measures against the European Union, Turkey, and India.
  • Antidumping and countervailing duties are also ineligible for deferred payments. These are the most common type of trade barrier, further limiting the deferrals’ impact.
  • Companies must be experiencing “significant financial hardship” to be eligible This means a company must have lost at least 60 percent of its sales since this time in 2019.

The Cato Institute’s Dan Ikenson estimates the deferrals will total about $6 billion. That is certainly enough to buy some time for some struggling businesses. For context, total customs duties in 2019 were $85 billion. Total U.S. imports were $3.43 trillion (in chained 2012 dollars; $3.77 trillion in 2019 dollars). The most newsworthy part of these deferrals might be how newsworthy they aren’t.

The administration and Congress could do much better. A more wide-ranging trade relief measure ewould include Trump’s newly enacted tariffs. It could even do away with them entirely.

Considering the hemming, hawing, and uncertainty that surrounded even this small deferral, Congress should give businesses some stability to plan around by taking back the tariff-making authority it delegated away to the president in the 1960s and 1970s. This would prevent further increases while insuring against ad hoc multibillion-dollar policy changes with little or no notice.

While better than nothing, this deferral is far less than what needs to be done to allow businesses to rebuild, save consumers money, and for supply networks to get medical equipment where it is most needed.

That said, the deferral has a subtle hidden benefit. It marks at least the second time the Trump administration has tacitly admitted that Americans, not foreign exporters, pay tariffs. The first admission happened last August when adviser Peter Navarro called a delay in upcoming new China tariffs “President Trump’s Christmas present to the nation.” More such presents would help protect public health right now while helping with economic rebuilding when the pandemic passes.

On the Radio: #NeverNeeded Regulations

At 7:15 ET today, I’ll appear on the Lars Larson Show to talk about #NeverNeeded regulations.