There Is Nothing Left to Cut

Posted on March 6, 2013 | Comments Off on There Is Nothing Left to Cut

The White House spends about $277,000 per year on staff calligraphers.

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Posted in Spending

Costco CEO Favors Minimum Wage Hike

Posted on March 6, 2013 | Comments Off on Costco CEO Favors Minimum Wage Hike

An overlooked argument in the minimum wage debate is that a high minimum wage gives big businesses an artificial competitive advantage over their smaller competitors. As I noted recently:

When states are considering hiking their minimum wages, big companies like Walmart routinely lobby in favor of the increases. They know that while they can afford the extra payroll, the mom-and-pop store down the road might not be able to. Advantage: Walmart.

As if on cue, the Huffington Post reports today that Costco CEO Craig Jelinek came out in favor of increasing the minimum wage to $10 per hour, even higher than President Obama’s proposed $9 per hour. The article notes that Costco has a reputation for paying its employees very well, and would be mostly unaffected by such an increase.

Who would be affected? Costco’s smaller competitors, who would have to raise prices and/or trim their workforces to make payroll. Advantage: Costco.

Given how popular minimum wage increases are with non-economists, Jelinek stands to reap some good PR for Costco from his announcement. And maybe he really believes that a minimum wage hike would be a net good for the working poor. But another plausible explanation is rent-seeking — using government regulations to gain artificial competitive advantages (and profits). And that’s something a struggling economy could do without.

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Posted in Economics, Price and Wage Controls, Public Choice

Making the FCC More Transparent

Posted on March 6, 2013 | 1 comment

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If there’s one thing the regulatory state could use more of, it’s transparency. In today’s ​Washington Times​, I shine a little light on the FCC:

In Beltway terms, the Federal Communications Commission’s $350 million budget request for 2013 is practically a rounding error. Yet it costs the American people a lot more than that. In fact, it is the third-most-expensive federal agency, but thanks to a lack of transparency, very few people are aware of that fact. That’s because the FCC’s regulations impose compliance costs of $142 billion per year — more than 400 times its budget. Only the Environmental Protection Agency and the Department of Health and Human Services cost American taxpayers more.

To put that in context, consider that the cost of FCC regulations is in the same ballpark as the entire 2011 national gross domestic products of Vietnam ($123 billion) and Hungary ($140 billion). The $77 billion cost of the FCC’s wireless spectrum regulations alone is bigger than Ecuador’s entire $66 billion economy.

Read the whole thing here. See also CEI’s recent Regulatory Report Cards on the FCC and the EPA.

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Posted in regulation, Technology

CEI’s Battered Business Bureau: The Week in Regulation

Posted on March 4, 2013 | Comments Off on CEI’s Battered Business Bureau: The Week in Regulation

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This week in the world of regulation:

  • Last week, 74 new final regulations were published in the Federal Register. This is up from 53 new final rules the previous week.
  • That’s the equivalent of a new regulation every 2 hours and 16 minutes — 24 hours a day, 7 days a week.
  • All in all, 538 final rules have been published in the Federal Register this year.
  • If this keeps up, the total tally for 2013 will be 3,273 new final rules.
  • Last week, 1,405 new pages were added to the 2013 Federal Register, for a total of 13,976 pages.
  • At its current pace, the 2013 Federal Register will run 85, 220 pages.
  • 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 9 so far in 2013.
  • The total compliance costs of this year’s economically significant regulations ranges from $2.532 billion to $4.810 billion.
  • So far, 51 final rules that meet the broader definition of “significant” have been published in 2013.
  • So far this year, 93 final rules affect small business; 13 of them are significant rules.

Highlights from final rules published last week:

  • This week’s economically significant rule is part of the health care bill. It sets standards for health benefits and actuarial practices. The Department of Health and Human Services declined to give a number as to what they expect it to cost. Their only nod to transparency is to say that they believe it costs less than $139 million per year, which is the threshold for a “major” rule under the Congressional Review Act, which would require HHS to disclose more data. Since the rule is classified as “economically significant” under Executive Order 12866, I am assuming that this rules costs the bare minimum of $100 million per year for that classification. If HHS deigns to publicly release its cost estimates, I will gladly revise the running compliance cost tally.
  • The federal government has a Citrus Administrative Committee, complete with a website that looks like it was made in 1995. A new rule from the Agricultural Marketing Service changes the membership qualifications.
  • The federal government also sells pecan crop insurance. A new rule updates some of its provisions.
  • The FCC requires broadcasters to “protect and serve children in their audience.” Without going into the First Amendment implications of this policy, the FCC announced that related regulations it originally issued in 2005 became effective as of February 26.

For more data, go to TenThousandCommandments.com.

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Why James Buchanan Deserved His Nobel

Posted on March 1, 2013 | Comments Off on Why James Buchanan Deserved His Nobel

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Sometimes offhand comments are the most revealing of all about someone’s character. Many Nobel laureates are defined by their vanity at least as much as their accomplishments. Not Buchanan. In an aside near the end of an autobiographical essay — written, at least in part, so he could shoo away pesky journalists asking about his life story, telling them to read this instead — he remarks that he doesn’t even feel like a part of the discipline whose highest honor he had recently won:

I am not, and never have been, an economist in an narrowly defined meaning. My interests in understanding how the economic interaction process works have always been instrumental to the more inclusive purpose of understanding how we can learn to live one with another without engaging in Hobbesian war and without subjecting ourselves to the dictates of the state. The “wealth of nations,” as such, has never commanded my attention save as a valued by-product of an effectively free society.

-James Buchanan, Better than Plowing and Other Personal Essays, p. 17

Right in line with the subtitle of Buchanan’s favorite book of his, The Limits of Liberty: Between Anarchy and Leviathan. The Buchananite approach is so much more relevant to the real world than the discipline’s conventional approach of inapplicable, if pretty, mathematical gymnastics.

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Posted in Books, Economics, Great Thinkers, Public Choice

Sequester Symposium

Posted on March 1, 2013 | Comments Off on Sequester Symposium

My colleague John Berlau was kind enough to cite me in his contribution to a National Review symposium on the sequester. You can read his otherwise-excellent article here.

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Posted in Economics, Media Appearances, Spending

Hoover Didn’t Cut Spending

Posted on March 1, 2013 | Comments Off on Hoover Didn’t Cut Spending

Most people, including Washington Post columnist Harold Meyerson, believe that Herbert Hoover’s laissez-faire budget cuts worsened the Great Depression. I have a letter in today’s paper pointing out that that isn’t true:

Harold Meyerson’s Feb. 27 op-ed column, “The perils of austerity,” claimed that Herbert Hoover cut spending. Hoover actually increased nominal spending by 48 percent in just four years. When he took office, the federal budget was $3.1 billion. His last budget, fiscal 1933, was $4.6 billion. Since there was roughly 10 percent annual deflation during that time, Hoover doubled federal spending in real terms. Even inside the Beltway, that does not qualify as a cut, let alone austerity. Mr. Meyerson should look elsewhere for arguments against sequestration.

Ryan Young, Washington
The writer is a fellow at the Competitive Enterprise Institute.

For more on how Hoover’s reputation is almost exactly opposite the policies he actually enacted, see Steve Horwitz’s excellent paper, “Herbert Hoover: Father of the New Deal.”

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Posted in Correspondence, Economics, Spending

CEI Podcast for February 28, 2013: Italy’s Troubling Election Results

Posted on February 28, 2013 | Comments Off on CEI Podcast for February 28, 2013: Italy’s Troubling Election Results

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Have a listen here.

The results of Italy’s general election were announced this week, setting markets on edge across the Eurozone. For all intents and purposes, Italy is without a government. There is no clear majority in the parliament’s upper house, and former comedian Beppe Grillo’s populist Five Star Movement captured a quarter of the vote. Warren Brookes Fellow Matthew Melchiorre finds the outcome surprising, as well as troubling.

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Posted in CEI Podcast, Elections, International, Political Animals

REINS Act Introduced in the Senate

Posted on February 28, 2013 | Comments Off on REINS Act Introduced in the Senate

The Regulations from the Executive In Need of Scrutiny (REINS) Act would require Congress to hold a vote on all new regulations with economic effects of more than $100 million per year. Sen. Rand Paul introduced the Senate version of the bill today. Wayne Crews and I issued a press release offering support for the principle of reining in regulation without representation. I offered the following comment:

“In an average year, Congress will pass a little over 100 bills into law, while regulatory agencies will pass more than 3,500 new regulations.

“It’s easy to see why members of Congress like agencies to do their job for them. If a regulation turns out to be unpopular, or more costly than expected, they can just shift the blame to, say, the EPA or FCC. It’s well past time for Congress to take its lawmaking responsibility seriously again. REINS is the first step in that process.”

Read the whole release here. Wayne and I wrote about the REINS Act for The American Spectator a few weeks ago here.

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Posted in regulation

Progressives Should Be Wary of a Minimum Wage Increase

Posted on February 28, 2013 | Comments Off on Progressives Should Be Wary of a Minimum Wage Increase

President Obama set off quite a debate when he proposed raising the federal minimum wage from $7.25 $9.00 per hour. Minimum wage hikes poll very well, especially among progressives. Over at the American Spectator, I argue that progressives should look elsewhere for ways to help the poor:

Then there is the matter that high minimum wages help big businesses at the expense of smaller competitors. When states are considering hiking their minimum wages, big companies like Walmart routinely lobby in favor of the increases. They know that while they can afford the extra payroll, the mom-and-pop store down the road might not be able to. Advantage: Walmart.

Just because a progressive proposes a policy doesn’t mean that the policy is, in fact, progressive. A high minimum wage causes regressive income redistribution.

Read the whole thing here.

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Posted in Economics, Price and Wage Controls