This Week in Ridiculous Regulations

After a short Labor Day breather, Supreme Court nominee Brett Kavanaugh’s hearings and White House intrigue made for a lively four-day week. Meanwhile, agencies issued new regulations ranging from target shooting to fireworks shows over Lake Erie.

On to the data:

  • Last week, 35 new final regulations were published in the Federal Register, after 89 the previous week.
  • That’s the equivalent of a new regulation every four hours and 48 minutes.
  • Federal agencies have issued 2,268 final regulations in 2018. At that pace, there will be 3,284 new final regulations. Last year’s total was 3,236 regulations.
  • Last week, 718 new pages were added to the Federal Register, after 1,310 pages the previous week.
  • The 2018 Federal Register totals 45,233 pages. It is on pace for 63,175 pages. The all-time record adjusted page count (which subtracts 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. Five such rules have been published this year, none in the last week.
  • The running compliance cost tally for 2018’s economically significant regulations is a net savings ranging from $348.9 million to $560.9 million.
  • Agencies have published 75 final rules meeting the broader definition of “significant” so far this year.
  • So far in 2018, 393 new rules affect small businesses; 20 of them are classified as significant.

Highlights from selected final rules published last week:

  • No more target shooting on publicly-owned lands in the Eastern Lake Mountains in Utah County, Utah.
  • The Rural Utilities Service has new procedures for announcing grants.
  • Side-facing seats on 747s.
  • The Homeland Security Department is “increasing the premium processing fee charged by U.S. Citizenship and Immigration Services (USCIS). DHS is increasing the fee by 14.92 percent, the percentage change in inflation since the fee was last adjusted in 2010… The adjustment increases the fee from $1,225 to $1,410.” (From August 31)
  • The 2008 financial crisis was due largely banks buying and selling mortgages they knew wouldn’t be repaid, and customers happy to play along. So, too, are regulators, as recently as Friday.
  • A safety zone in Lake Erie around the Moonlight on the Bay fireworks showin Erie, PA.

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

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August Brought 201,000 New Jobs, but Future Gains Threatened by Trade Restrictions

This is a statement from my colleague Iain Murray and me about today’s jobs report. Original statement online here.

The U.S. economy added 201,000 jobs in August, the U.S. Labor Department announced today. Good news, but impending trade restrictions could put a damper on those gains, Competitive Enterprise Institute analysts warn.

Iain Murray, CEI senior fellow:

Today’s jobs numbers are further evidence that the economy is in a strong position. Beating expectations for jobs created in an increasingly tight labor market is a sign of economic dynamism. Supply-side reforms like deregulation and tax cuts are working. The tax cuts probably enabled employers to offer higher starting wages, which has been a major area of concern since the Great Recession.

There will be some people, however, who point to the jobs numbers as evidence that the trade war is having no effect on employment. This would be a mistake. To be sure, trade never accounts for more than a small percentage of jobs lost in any given month, and those effects will be swamped by new job creation in a strong economy. However, the effect of tariffs over time will be to entice employers and workers into the wrong industries and the wrong jobs—jobs the market would not have created on its own. That means that those jobs will be less able to spur growth and their wages will be artificially high. This will weaken the economy in the long run.

Ryan Young, CEI fellow:

It is good news that the economy continues to create new jobs—it shows that economic fundamentals are strong despite political turmoil. The worry is that the good news is only in the short term. Regulatory burdens have practically stopped growing, which probably deserves some of the credit. But policymakers need to lock in recent short-term reforms with permanent legislation.

Producers have been stockpiling affected goods before new trade tariffs kick in, which gives an economic boost now, but likely at the expense of future months. Tax cuts can also create short-term economic benefits, though again, at the cost of long term harm if increased deficits must be repaid eventually, with interest.

Like quarterbacks, presidents get too much criticism when the economy is bad and too much credit when times are good. Unemployment rates are mostly due to a number of long-term factors a president simply does not control. Congress can help by cooperating with the current president’s deregulatory agenda and restraining his bad impulses on trade and the Federal Reserve’s independence.

Murray and Young recently co-authored a study making the case for free trade, “Traders of the Lost Ark: Rediscovering a Moral and Economic Case for Free Trade.”

Tariffs Invite Corruption

The Commerce Department is offering exemptions to President Trump’s recent steel and aluminum tariffs. More than 2,000 companies have applied. That means that there are Commerce Department employees with the power to decide, in some cases, whether a company can continue to exist. Even if there is no existential threat to a company, a bureaucrat’s discretion could decide whether or not a company will be able to retain all of its workers, keep prices low, make a profit or a loss, or remain competitive at home and abroad.

Commerce Secretary Wilbur Ross is also refusing to disclose the process or criteria for granting the exemptions. Sens. Ron Johnson (R-WI) and Claire McCaskill (D-MO) have requested that Secretary Ross make these policies public; he has not responded. The senators are currently considering stronger measures to get Secretary Ross to follow basic transparency.

Secretary Ross’ reluctance is telling. What are the odds that newly-powerful Commerce Department employees will earn unreported income this year? The chances are well above zero. At the very least, Washington’s restaurant and entertainment industries will likely get  extra business.

Tariffs create opportunities for corruption. The U.S. does well by global standards at keeping corruption in check, ranking 16th out of 180 countries in Transparency International’s 2017 Corruption Perceptions Index. But each new tariff creates corruption opportunities where there were none before. Even while tariffs are merely being considered, lobbyists are making the case any way they can for why a new tariff would help or harm their clients. After they take effect, if the government offers exemptions, it creates still more temptations for affected companies, not to mention the government employees with the power to approve or deny the exemptions.

Even with all the new tariffs the Trump administration has so far enacted, they likely will not play a factor in any change in America’s rankings in future editions of Transparency International’s index. If anything, it might actually improve America’s relative ranking, even if the absolute amount of corruption increases. That isn’t necessarily good news. That is because, as everyone but Peter Navarro predicted, other countries reacted to each of President Trump’s new tariffs with retaliatory tariffs of roughly the same magnitude.

Retaliatory tariffs are creating new corruption opportunities abroad. And in countries with less rigorous cultural and institutional corruption safeguards, corruption increases could be much higher than here in the United States. This risks harming the quality of governance even in allied countries—hardly a positive foreign policy gesture at a time when the U.S. is seeking allies for its other foreign policy objectives.

For more on how tariffs create new opportunities for corruption, read the new CEI study “Traders of the Lost Ark” here.

This Week in Ridiculous Regulations

August ended with a bang, leaving the 2018 Federal Register on the brink of the 45,000-page mark going into the Labor Day holiday. Agencies passed 89 new regulations last week, ranging from 71-pound packages to floating cabins.

On to the data:

  • Last week, 89 new final regulations were published in the Federal Register, after 65 the previous week.
  • That’s the equivalent of a new regulation every one hour and 53 minutes.
  • Federal agencies have issued 2,233 final regulations in 2018. At that pace, there will be 3,284 new final regulations. Last year’s total was 3,236 regulations.
  • Last week, 1,310 new pages were added to the Federal Register, after 1,482 pages the previous week.
  • The 2018 Federal Register totals 44,729 pages. It is on pace for 65,774 pages. The all-time record adjusted page count (which subtracts 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. Five such rules have been published this year, none in the last week.
  • The running compliance cost tally for 2018’s economically significant regulations is a net savings ranging from $348.9 million to $560.9 million.
  • Agencies have published 75 final rules meeting the broader definition of “significant” so far this year.
  • So far in 2018, 384 new rules affect small businesses; 20 of them are classified as significant.

Highlights from selected final rules published last week:

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

Spontaneous Order in Roman History

Edward Gibbon, describing a revival of sorts under Cola di Rienzo in 14th century Rome, on p. 2401, near the end of Decline and Fall, channels a bit of Adam Smith and F.A. Hayek:

“As soon as the life and property of the subject are secure, the labours and rewards of industry spontaneously revive: …”

Legalized Plunder in 14th Century Venice

Venice, as much as any other city, was founded on international trade and commerce. Even today, the outward-oriented and freewheeling worldview that commerce inspires is that lagoon city’s defining characteristic. From p. 287 of Roger Crowley’s City of Fortune: How Venice Ruled the Seas:

For Venice, piracy was the most detested crime, an affront to business and the rule of law. The Republic preferred its maritime violence organized at state level.

Crowley goes on to describe state-approved instances of piracy by and against Venetians, and other nations’ grievances about the same. If all this sounds familiar in the context of today’s trade debate, you’re not alone. History is alive, and this is a good reason to study it closely.

Trade Is as Old as Humanity

Archaeologists have uncovered evidence of long-distance trade going as far back as 200,000 years ago. The artifacts are mainly things such as obsidian tools that are relatively impervious to the ravages of time, found hundreds of miles away from where they naturally occur. In fact, such finds can determine economic health through history. After the fall of the Roman Empire, long-distance artifacts such as foreign coins, papyrus, and oil lamps suddenly disappear from Europe’s archaeological sites. We call this low-trade period the Dark Ages. These and other distant items reappear a few centuries later, both in the ground and in surviving literature. Not coincidentally, times were better.

Trade can also explain such basics of civilization as the birth of cities. Some people settled down in one place for the first time and specialized in agriculture, trading their surplus for goods and services. This led to a better life. As Iain Murray and I point out in our new paper. “Traders of the Lost Ark.”

Over time, people found they could achieve a more stable lifestyle by tending to domesticated crops and animals—at least compared to nomadic hunting and gathering—but this required specialization and trade. For example, some people specialized in farming and traded their surplus crops to others in exchange for tools or shelter. Others specialized in services, such as milling grain into flour or brewing it into beer. Without trade, such specialization would have been impossible.

Trade also made the first governments possible:

The late University of Maryland economist Mancur Olson theorized that the first governments were “stationary bandits,” who traded protection from other bandits—or themselves—for a fee in the form of taxation.

As governments became more established, they later decided to bite the hand that feeds them:

When governments get involved in trade, it is usually to erect barriers to it. While special interests have always benefited from the reduced competition trade restraints bring, historically, most traders have objected to such interventions. Important clauses of [the] Magna Carta enjoin the King of England from stopping traders from entering the country. The American Declaration of Independence, in its litany of offenses blamed on King George III, chides him for “cutting off our Trade with all parts of the world.”

This is why the first “international” trade system was actually a mechanism for restricting and redirecting trade to fit some government prerogative. The mercantilist system that governed trade during the colonial era was based on the “rights” of monarchs to maintain a “balance of trade” that would allegedly enrich them and their favored commercial partners. It accomplished this by imposing a series of tariffs, import quotas, and prohibitions to affect the balance of trade in favor of these interests. In effect, the mercantilist system was the first example of crony capitalism writ large.

This kind of big-picture historical sketch might seem academic. But when it comes to trade, it’s very practical. It is important to remember our roots. No trade, no civilization. The debate over tariffs and other trade barriers goes back much, much further than the last two years. We are the current participants in a debate as old as our species—and knowing exactly what we have been fighting over for so long gives context for exactly why it is important to fight, and fight hard, against every new trade restriction that politicians concoct.

For more on why the freedom to exchange is so important, read the full “Traders of the Lost Ark” study here.