CEI Podcast for August 15, 2013: Justice Department Blocks Airline Merger

american airlines planes
Have a listen here.

On Tuesday, the Justice Department filed an antitrust suit to block the proposed American Airlines and US Airways, alleging that the reduced competition would raise prices and reduce consumer options. Fellow in Land-use and Transportation Studies Marc Scribner thinks the charges are overblown, and has ideas of his own for increasing competition.

Buchanan on the Nirvana Fallacy

Only the most naive of libertarians deny that market failures exist. Externalities, information asymmetries, and public goods problems, in their various combinations, regularly lead to outcomes that fall well short of the blackboard economist’s Pareto-optimal perfect competition model.

That’s all very well established. What isn’t is the leap in logic that most people make next: therefore, government. Well, maybe. But maybe not. If the goal is efficiency, it becomes an empirical question. But most economists treat government as a black box without its own desires, goals, and behavioral quirks. Government actors are people, too. This means that government is subject to the same failures as markets. Harold Demsetz called the common assumption of perfect government the Nirvana Fallacy.

Geoffrey Brennan and James Buchanan, without using its name, perfectly describe the Nirvana Fallacy on p. 130 of their 1985 book The Reason of Rules:

There is no necessary presumption that simply because markets are imperfect, political processes will work better. On the contrary, as public-choice theory reminds us, there are very good reasons for doubting the capacity of political processes to achieve Pareto optimality. The normatively relevant comparison is between two imperfect institutions.

In fact, built-in incentive problems ranging from concentrated benefits and diffused costs to higher discount rates and shorter time horizons mean that government is usually more imperfect than markets. People seeking to improve on market outcomes who do not factor this into their analysis are unlikely to succeed.

Bootleggers and Baptists

The great Bruce Yandle explains the theory of baptists and bootleggers in regulation in a new LearnLiberty video. Click here if the embedded video doesn’t work.

Prof. Yandle originally explained his theory in a famous article in Regulation magazine in 1983.

Slow News Day

Politico: Michelle Obama posts ‘selfie’ with Bo

CEI’s Battered Business Bureau: The Week in Regulation

Cherry orchard
This week in the world of regulation:

  • Last week, 83 new final regulations were published in the Federal Register. There were 82 new final rules the previous week.
  • That’s the equivalent of a new regulation every 2 hours and 1 minute — 24 hours a day, seven days a week.
  • All in all, 2,243 final rules have been published in the Federal Register this year.
  • If this keeps up, the total tally for 2013 will be 3,705 new final rules.
  • Last week, 1,639 new pages were added to the 2013 Federal Register, for a total of 48,716 pages.
  • At its current pace, the 2013 Federal Register will run 79,085 pages, which would be good for fourth all time. The current record is 81,405 pages, set in 2010.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. Five such rules were published last week, for a total of 22 so far in 2013.
  • The total estimated compliance costs of this year’s economically significant regulations ranges from $5.78 billion to $10.39 billion.
  • So far, 197 final rules that meet the broader definition of “significant” have been published in 2013.
  • So far this year, 414 final rules affect small business; 54 of them are significant rules.

Highlights from final rules published last week:

For more data, go to TenThousandCommandments.com.

Kudos to Cato

The best way to rebut speech you disagree is with speech of your own. In Washington, a more common tactic is simple intimidation. Cato president John Allison’s response when faced with just that is a thing of beauty. Quoted in full, here is his letter to a man seemingly incapable of disagreeing agreeably:

Dear Senator Durbin:

Your letter of August 6, 2013 is an obvious effort to intimidate those organizations and individuals who may have been involved in any way with the American Legislative Exchange Council (ALEC).

While Cato is not intimidated because we are a think tank—whose express mission is to speak publicly to influence the climate of ideas—from my experience as a private-sector CEO, I know that business leaders will now hesitate to exercise their constitutional rights for fear of regulatory retribution.

Your letter thus represents a blatant violation of our First Amendment rights to freedom of speech and to petition the government for a redress of grievances. It is a continuation of the trend of the current administration and congressional leaders, such as yourself, to menace those who do not share your political beliefs—as evidenced by the multiple IRS abuses that have recently been exposed.

Your actions are a subtle but powerful form of government coercion.

We would be glad to provide a Cato scholar to testify at your hearing to discuss the unconstitutional abuse of power that your letter symbolizes.

Sincerely,

John Allison

Cato scholar Ilya Shapiro, who has tussled with Sen. Durbin on free speech issues before, has more.

CEI Podcast for August 8, 2013: CEI Appeals Dismissal of Dodd-Frank Lawsuit

Judges-gavel
Have a listen here.

A federal judge has dismissed a lawsuit brought by CEI, 11 state attorneys general, and the State National Bank of Big Spring challenging the constitutionality of several sections of the Dodd-Frank financial regulation act. CEI general counsel Sam Kazman discusses plans to appeal the case.

CEI’s Battered Business Bureau: The Week in Regulation

fancy cheese
This week in the world of regulation:

  • Last week, 82 new final regulations were published in the Federal Register. There were 80 new final rules the previous week.
  • That’s the equivalent of a new regulation every 2 hours and 3 minutes — 24 hours a day, seven days a week.
  • All in all, 2,160 final rules have been published in the Federal Register this year.
  • If this keeps up, the total tally for 2013 will be 3,684 new final rules.
  • Last week, 1,707 new pages were added to the 2013 Federal Register, for a total of 47,077 pages.
  • At its current pace, the 2013 Federal Register will run 78,989 pages, which would be good for fourth all time. The current record is 81,405 pages, set in 2010.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. No such rules were published last week, for a total of 17 so far in 2013.
  • The total estimated compliance costs of this year’s economically significant regulations ranges from $5.78 billion to $10.39 billion.
  • So far, 149 final rules that meet the broader definition of “significant” have been published in 2013.
  • So far this year, 353 final rules affect small business; 33 of them are significant rules.

Highlights from final rules published last week:

  • The FDA’s Animal and Plant Health Inspection Service is suspending animal care regulations that require a magician who uses a single rabbit in his act to get a license for it, submit proof that he regularly takes it to the vet, undergo random home inspections, and submit a 28-page disaster plan for how to handle different emergencies. The agency will presumably exempt small operators like magicians when it re-issues the rules. I previously wrote about this regulatory kerfuffle here and here.
  • If your family is on food stamps, the federal government shares your information with local school districts.
  • The USDA not only requires licenses for dairy imports, it also imposes tariffs and quotas. The goal is to financially benefit dairy farmers, though a side effect is higher prices and less choice for consumers.
  • If you grow tart cherries in Michigan, New York, Pennsylvania, Oregon, Utah, Washington, or Wisconsin (but not elsewhere), be aware of new handling regulations.
  • The Social Security Administration will henceforth use the term “intellectual disability” instead of “mental retardation.”
  • 20 new EPA regulations.
  • The Navy has issued some exemptions to its regulations for preventing collisions at sea.

For more data, go to TenThousandCommandments.com.

REINS Act Passes the House

Rep. Todd Young (no relation) announced via Twitter that the REINS Act, which he sponsored, has passed the House.

Wayne Crews and I wrote about REINS for Forbes, and also talked about the bill in a podcast.

The bill now moves to the Senate, where Sen. Rand Paul will try to shepherd it through. The White House issued a veto threat, but with all the recent accountability scandals, a bit of good publicity in that department could go a long way.

 

Slow News Day

Politico: Events chief fights drab D.C. parties