Category Archives: Publications

Re-Prioritizing Regulatory Reform

The 2019 edition of Wayne Crews’ Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State is out now. It contains basic data on the regulatory state that is harder to find than it should be: how many regulations agencies issue, how much they cost, and what is coming up next. Wayne also has several reform ideas, from a regulatory budget akin to the government’s sending budget, to improved disclosure and cost accounting standards, to more congressional involvement in the rulemaking process.

If you prefer a shorter version, Wayne and I have a piece at National Review sharing the main findings and making the case for re-prioritizing regulatory reform:

President Trump, who made regulatory reform a priority early in his term, claims to have reduced federal regulatory burdens by $23 billion in fiscal year 2018. That’s the good news. The bad news is that he has hinted at declaring premature victory and given indications of abandoning the issue altogether.

Congress should also be on board:

Congress has shown interest in executive-branch transparency in matters concerning Trump himself. It should extend that interest to regulatory agencies over which President Trump wields power.

Read the whole piece here. The new 2019 edition of Ten Thousand Commandments is here, and a summarizing press release is here.

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Antitrust Regulation Is Turning into a Campaign Issue

Both parties are making antitrust regulation a 2020 campaign issue. Neither President Trump nor most of the Democratic candidates are proposing improvements. Over at the Washington Examiner I take a closer look:

After a two-decade lull following the Microsoft case, big antitrust enforcement cases are back in vogue. Both political parties are making antitrust regulation a 2020 campaign issue. Regulators, politicians, and voters have reasonable concerns about concentrated corporate power. But few policies are easier for big companies to game than antitrust regulation. Reformers should favor having fewer regulations for special interests to capture, not more.

Read the whole piece here. See also Wayne Crews’ and my new paper, “The Case against Antitrust Law: Ten Areas Where Antitrust Policy Can Move on from the Smokestack Era.”

CEI Makes the Case against the Use of Antitrust Law

This is a CEI press release for Wayne Crews’ and my new paper on antitrust reform, cross-posted from CEI.org

The Competitive Enterprise Institute today released a report making the case that government use of antitrust law to break up big companies has a chilling effect on long-term investment and innovation and harms competition and consumers.

In “The Case against Antitrust Law: Ten Areas Where Antitrust Policy Can Move on from the Smokestack Era,” co-authors Ryan Young and Wayne Crews argue that the renewed call for use of antitrust law by policymakers on both sides of the aisle is dangerous for both consumers and producers. Young and Crews make the case that antitrust provisions of law should be repealed.

“While advocates of antitrust enforcement believe its use will bolster competition, the facts show the mere threat of antitrust penalties have a chilling effect on entrepreneurs and their ability to innovate,” warned Ryan Young, CEI senior fellow and report co-author. “Repealing antitrust laws in favor of a market-based approach to competition would reduce regulatory uncertainties for businesses and foster an environment where companies and entrepreneurs can innovate, which only benefits consumers.”

The antitrust issue has taken on greater urgency as politicians – both Republicans and Democrats – push for more aggressive antitrust enforcement. Policymakers in both the United States and the European Union have expressed an interest in using antitrust law to break up big technology companies like Facebook, Apple, Amazon, Netflix, and Google.

“Despite the calls for more antitrust regulation from Washington, the best outcome for consumers and a competitive marketplace would be to repeal antitrust laws and regulations entirely,” said Wayne Crews, CEI Vice President for Policy and report co-author. “Subjecting our dynamic economy to the policies of the smokestack era would be devastating for the many types of innovation we are seeing in the modern, diverse marketplace. Consumers benefit from competition and innovation, not heavy-handed government intervention and regulation.”

The report makes several key recommendations, including:

  • Repeal the Sherman Act of 1890. If a company is making extraordinary monopoly profits, the only way it can keep competitors at bay is to use government to protect its position from competitors. The solution is taking away the government’s power to protect such companies from competition.
  • Stop equating mergers with monopoly. Horizontal mergers – between companies competing in the same market – reduce the number of competitors in a given market while increasing their average size and are a red flag for antitrust regulators. But size or market concentration of an entity or industry should not be an antitrust offense, far from it. In an era in which it is readily apparent and agreed-upon that we need larger-scale infrastructure, and further expect novel ventures like commercial space travel, some firms and industries of the future need to be far larger than what we see today. Laws and regulators should not be concerned with size but whether the company attains its size through competition or from government favors.
  • Stop worrying about “predatory pricing.” Antitrust regulators can punish a company if it charges lower prices than its competitor, under the guise of predatory pricing. The idea is that a company can sell its wares at a loss in order to gain market share, perhaps even causing competitors to go bankrupt. But the only way for a “predator” undercutting its “prey” to keep a permanent monopoly is to permanently sell at a loss. That results in bankruptcy, not monopoly.
  • Repeal the Robinson-Patman Act. Price discrimination is selling goods to different people at different prices and is regulated by the Robinson-Patman Act. Common examples of price discrimination include putting products temporarily on sale, giving bulk discounts for large quantity orders, or membership programs. There is much uncertainty around what is permissible and what is illegal price discrimination, making the Robinson-Patman Act unworkable and unenforced. Repealing it would take away needless uncertainty and give consumers and businesses peace of mind.

View the report and the rest of its recommendations, The Case against Antitrust Law: Ten Areas Where Antitrust Policy Can Move on from the Smokestack Era by Ryan Young and Wayne Crews.

Read more:

New Study: The Case against Antitrust Law

Antitrust regulation is a complex, multifaceted issue. It brings together insights from law, economics, political science, history, philosophy, and other disciplines. Right now both political parties are ramping up their antitrust rhetoric, and it will likely be a live issue throughout the 2020 election cycle. A working understanding of how antitrust regulation works is important for understanding why it works so poorly, and should ultimately be abolished. To that end, Wayne Crews and I have a new study out, “The Case against Antitrust Law: Ten Areas Where Antitrust Policy Can Move on from the Smokestack Era.”

If you prefer the short version, here is a press release. We will also be running a series of blog posts hitting the main arguments. Often, a frequent drips-and-drabs approach to learning an issue is as effective as one intensive sitting. The initial posts will sketch out broader themes of antitrust regulation and the main sides of the debate. After that, we will go through the items on our “Terrible Ten” list of failed antitrust policies that should be abolished.

For additional CEI antitrust resources, we also have a dedicated landing page at antitrust.cei.org. Wayne’s and my full study is here.

Agenda for the 116th Congress: Trade

The Competitive Enterprise Institute’s new agenda for Congress, “Free to Prosper,” is out. It has an entire chapter devoted to trade, which will be a busy issue for years to come. To cut to the chase, here are our specific recommendations:

  • Repeal Section 232 of the Trade Expansion Act of 1962.
  • Repeal Sections 201 and 301 of the Trade Act of 1974.
  • Refuse to pass legislation enacting retaliatory trade barriers.
  • Institute a rule explicitly forbidding the president from enacting retaliatory trade barriers.
  • Pursue a bilateral trade agreement with the United Kingdom.
  • Pursue a bilateral trade agreement with the European Union.
  • Pursue either a bilateral or a multilateral trade agreement with China.
  • Oppose industries who want to burden future trade agreements with trade-unrelated provisions on labor, environment, intellectual property, and regulatory “harmonization.”

President Trump’s doubling of tariffs has already cost the economy almost 1.8 percentage points of growth. That means 2018’s 3.4 percent third quarter growth could have been 5.2 percent instead. If the economy veers into recession in the near future, President Trump’s trade policies will likely have played a major role. Congress needs to act as soon as possible to prevent further damage.

Our trade policy recommendations follow four general themes that have bipartisan appeal—important in a newly divided Congress.

The first theme is that the executive branch has grown too powerful. Only Congress has the rightful authority to tax. The president has abused the tariff-making authority Congress delegated back in the 1960s and 1970s with Sections 232, 201, and 301. The time has come for Congress to take back that power so no president cannot further abuse it.

The second theme is to move on from the “reciprocity” model for tariffs—the idea that America will only lower its tariffs if other countries also lower theirs. American tariffs hurt American consumers and producers regardless of what other countries do. To paraphrase the renowned Cambridge economist Joan Robinson, when other countries dump rocks into their own harbors, the solution is not to dump rocks into our own harbors.

Not only have America’s higher tariffs failed to convince other countries to lower their trade barriers, our trading partners have raised their in retaliation. American consumers and producers are being hit twice as hard—once by our own tariffs, and again by other countries’ retaliations. That’s more rocks and less harbor. Congress needs to do some dredging, and quickly.

Third, Congress should work with the executive branch on liberalizing trade with other countries. New agreements with the United Kingdom and European Union should emphasize not just lower tariffs, but the concept of regulatory equivalence. Basically, this means that if a product is deemed safe for people in the UK to use, then the U.S. government should automatically deem it safe as well. Such a policy would reduce compliance costs for each country’s domestic producers, reduce frictions to international commerce, and serve as a positive foreign policy gesture to boot. Note that this is different from regulatory harmonization, in which countries agree to have identical regulatory policies. Instead of harmonization’s uniformity, equivalence has an ethos of “if it’s good enough for you, it’s good enough for me,” while allowing countries to continue to experiment with new policies that might be more effective.

China is more complicated. President Trump pulled the U.S. out of the Trans-Pacific Partnership (TPP), which still has 11 member countries, with more likely to join. The binding agreement commits China to make many of the reforms the Trump administration has unsuccessfully been pressuring China to make via higher tariffs. It is not too late for the U.S. to rejoin the TPP.

The fourth theme is that future trade agreements should stick to trade issues wherever possible. This policy horse left the barn long ago, but it is important to remember for when unintended consequences come to pass in the future. In the short term, it can be expedient to add trade-unrelated labor provisions to buy union support, or environmental provisions to buy support from green energy companies and activists. It is a legitimate question whether the agreements could pass without the support such provisions can purchase. But it is just as easy to add poison pill-style trade-unrelated provisions that could torpedo an agreement. If the long-run goal is to create more wealth for more people—and it should be—trade agreements should stick to trade issues, and separate issues should be treated separately.

For more, read CEI’s “Free to Prosper: A Pro-Growth Agenda for the 116th Congress.” Previous posts in the Agenda for Congress series:

What’s on Tap for Trade in 2019

At noon today, the 116th Congress convened. Over at Fox Business, Iain Murray and I look at what the coming year has in store for the new Congress on trade. The two biggest items are the NAFTA/USMCA vote, which isn’t a big deal, and China, which is:

For Congress, the most important 2019 trade priority is reclaiming the tariff-making authority it delegated away in the 1960s and 1970s. Under the Constitution, only Congress has taxing power. Tariff delegation has long since served its purpose, and should have come back to Congress long ago.

The trade damage done in 2018 will take years to undo. The new NAFTA doesn’t matter much either way, but abandoning a failed tariff strategy is crucial.

The executive branch should rejoin the Trans-Pacific Partnership and engage the World Trade Organization’s dispute resolution process to encourage reform in China. But Congress has plenty to do, too. The time to start is now.

Read the whole thing here.

An Executive Order to Shine Light on Dark Matter

Over at The Hill, Wayne Crews and I make the case for an executive order that would limit executive power. It’s more plausible than it sounds:

There is precedent for such executive action. Ronald Reagan, Bill Clinton, and Barack Obama all issued executive orders to increase transparency and ensure that federal agencies follow better rulemaking procedures…

An executive order can set a positive precedent that Congress can later expand upon and codify. Such an executive order should strengthen disclosure requirements for guidance documents, which are not always made public. They should be made available in a single location and a standardized easily searchable format. After all, people cannot comply with regulations they do not know about.

Read the whole piece here. Wayne develops the idea more fully in his recent study “A Partial Eclipse of the Administrative State.”