CEI Book Club: Peter Navarro and Greg Autry, Death by China

Trump economic adviser Peter Navarro has a longstanding animus against China. It is important to know Navarro’s thoughts on China. He played a major role in pushing for the 25 percent tariffs on 1,108 Chinese goods currently being implemented (see this release from the United States Trade Representative for details). Those goods are worth a total of $50 billion. China announced retaliatory tariffs on $50 billion worth of U.S. goods, and another round of U.S. action is likely, possibly against $200 billion worth of Chinese goods. If a trade war is in fact brewing, Navarro will have played a large role in starting it.

In 2011, Navarro and coauthor Greg Autry published Death by China: Confronting the Dragon—A Global Call to Action. Navarro has written other books on China, such as 2008’s The Coming China Wars and 2015’s Hidden Dragon, coauthored with Gordon G. Chang. But Death by China is Navarro’s best known book. As with my previous critiques of Navarro’s thought, this review will start with some general observations about Death by China, then analyze specific parts of the book.

A striking theme in Death by China is that its tone and thought are very macho—and juvenile. The language is very strident, a strategy adolescent males often use to display confidence. It is easy and psychologically rewarding to belittle one’s opponent and feel bigger in comparison. It is also a way to distract attention away from the arguments at hand. This is handy if one lacks confidence in the arguments or in one’s ability to defend them.

Death by China is a sterling, if non-academic example of an attitude Deirdre McCloskey criticizes in “The Boys in the Sandbox,” the opening chapter of her book, The Vices of Economists—The Virtues of the Bourgeoisie:

It’s like an aunt watching her three-year old nephew and his friends playing in a sandbox. They are so earnest in their play, so full of confidence and life, so sure that what they are playing with is reality. The aunt would have to be a monster to be happy they are wrong. (p. 13)

It is opposite the strategy Homer and Herodotus used in The Iliad and The Histories. They humanized their antagonists and put noble words in their speeches. They made their Trojan and Persian opponents strong and cunning so that when the Greeks won, their victories were even more impressive. Navarro and Autry instead call their enemies “morally degraded Chinese ‘black hearts’” (p. 16) who were “raised in an ethical vacuum.” (p. 59) They contrast China with “the truly civilized nations of the world like the United States, Great Britain, France, and Japan.” (p. 104)

Of 16 chapters, all but two titles contain the word “death.” On the plus side, the table of contents provides several possible titles for heavy metal albums and horror movies, with chapters such as “Death by Red Hacker” and “Death by Darth Liu: Look Ma, There’s a Death Star Pointing at Chicago.” That chapter calls for the creation of a military space force, another juvenile idea, about which more below. The opening chapter simply asserts, “It Isn’t China Bashing if It’s True.”

One of the Internet’s guiding rules is a variant of Godwin’s Law, in which the probability that any philosophical argument will turn to Nazi Germany approaches 1 the longer it goes on. The rule is simple: the first person to invoke Adolf Hitler, or Nazi Germany, automatically loses the argument (unless, of course, that is actually the topic of discussion). By that rule, even the publisher’s blurb on the book’s Amazon page loses its argument:

Death by China documents the myriad ways that a powerful, wealthy, and corrupt Chinese Communist Party emboldened by a growing nationalistic frenzy is becoming the biggest threat to global peace, prosperity, and health since Nazi Germany.

The word “Nazi” appears six times in the book itself. But Navarro and Autry also use other language to make the same comparison—for example writing of the “most rapid military buildup of a totalitarian regime since the 1930s” (p. 112), and referring to Chinese submarines as “U-boats” (p. 123).

Navarro and Autry go out of their way to tell the reader about “the profound portrait of today’s China so accurately painted in the book.” (p. 263) For the most part, it isn’t. But Navarro and Autry do make some good points. Let’s look at those before turning to areas where their arguments fall short.

The Chinese government has a horrible human rights record, and Navarro and Autry give many examples, from Tiananmen Square to the Falun Gong persecutions to unsafe working conditions. As much as life in China has improved since Mao Zedong’s death in 1976, the Chinese government still has a long way to go before its treatment of its people can be called humane.

Chinese government officials cannot abide political disagreements that pose no threat to their power. They persecute many non-threatening religious beliefs and mistreat ethnic minorities, as well as domestic and foreign businesses. And the Great Firewall around China’s Internet is one of the world’s most egregious examples of censorship. China still has a prison camp system, the Laogai—interested readers should turn to survivor and Laogai Research Foundation founder Harry Wu’s Bitter Winds: A Memoir of My Years in China’s Gulag.

China’s economic policies also still have a very long way to go. As economist Jagdish Bhagwati often says about illiberal countries, the problem is that Adam Smith’s invisible hand is nowhere to be seen. The state still owns, whether de facto or de jure, a large percentage of businesses. Corruption is high, ranking 77thin the world in Transparency International’s 2017 Corruption Perception Index. Regulatory enforcement and punitive measures are applied arbitrarily, often with no apparent rhyme or reason, discouraging long-term investment. The government often requires Chinese control of foreign business investments. And the Chinese government and even many private businesses are guilty of widespread intellectual property theft.

Navarro and Autry also rightfully point out that China’s currency manipulation is bad policy, arguing that “a stronger yuan would put significantly more purchasing power in the hands of a woefully underdeveloped Chinese consumer.” They correctly argue that a floating yuan would provide a better deal for Chinese consumers, as well as their foreign trading partners, than the current policy of pegging the yuan to the dollar.

Daron Acemoglu and James Robinson argue in Why Nations Fail that countries with extractive rather than inclusive political institutions will find limits to their growth. Extractive institutions are those that enable include expropriation of private industries, high corruption, suppression of political dissent, and arbitrary regulations. Inclusive institutions, by contrast, incentivize political accountability, open democratic elections, judicial integrity, and consistently enforced property and other rights. As impressive as China’s reform program has been to date, its government is still more extractive than inclusive. Its growth is likely unsustainable without continuing political and economic liberalization. If that process were to stop or reverse, the Chinese people will never truly be free or become as rich as the United States, Western Europe, or the nearby Asian Tiger economies.

Navarro and Autry might disagree with Acemoglu and Robinson, though. Acemoglu and Robinson’s argument that China’s economy stands on fragile ground without liberalization doesn’t play into Navarro’s theme of China as the biggest threat to U.S. national security since the Nazis.

Regarding national security, President Trump recently made headlines when he proposed creating a new military branch called the space force. The idea may have come from Death by China, in which Navarro and Autry warn of China’s military aspirations in space:

Options run the gamut from boulders hurled off the moon with enough energy to destroy a metropolis on Earth, EMP pulse bombs designed to disable our electronic infrastructure, and directed energy weapons fired from space to orbiting H-bombs and space planes capable of raining nuclear death on any city in the world. (p. 162)

The boulder idea is straight out of Robert Heinlein’s 1966 science fiction novel, The Moon Is a Harsh Mistress. They also worry about China’s ability to destroy satellites:

When a few kilograms of gravel are thrown into orbit, they will attack the satellites like meteor showers and incapacitate the expensive GPS constellation. (p. 168)

The trouble with this fear is that such an attack would not advance Chinese interests. Debris does not discriminate, and China has its own satellite network to worry about. So while it could easily take out America’s military and commercial satellites, it would have to be willing to sacrifice its own satellites. The rest of the world would lose its satellites too, which would anger more than a few countries. Such is Navarro and Autry’s justification for the U.S. to establish a military space force.

There are also some errors of fact. For example, China is not “a country originally founded on anti-colonial, Marxist principles.” (p.4) China was first unified under the Qin dynasty in the third century B.C. Karl Marx was born in 1818. Mao and his fellow communist revolutionaries changed China’s flag and renamed it the People’s Republic of China, but they did not create a new country.

A common theme throughout the book is a decline in American manufacturing. According to the data, U.S. manufacturing is near an all-time high, both in terms of real output and in value added. Increased worker productivity can increase manufacturing output as manufacturing employment is reduced. This is actually good news; the U.S. economy gets spectacular output, plus more time and talent left over for other, additional purposes.

This is why manufacturing’s decline as a percentage of total U.S. GDP is also a good thing. Not only is U.S. manufacturing healthy and growing, but the rest of the economy is growing even faster. It turns out that non-manufacturing jobs are more lucrative on average, so the more of those, the better. Our diversified economy is better able to withstand economic shocks than less diversified countries like China, which not only has much smaller per capita output, but relies on manufacturing for 29 percent of its GDP, compared to less than 12 percent in the U.S. (See data here.)

Death by China also bemoans that current U.S. policy is “allowing a mercantilist and protectionist China to destroy the American manufacturing base and vitiate our economy.” (p. 124) Economists have long pointed out that mercantilism and protectionism are self-harming policies. When China raises trade barriers, it hurts itself. Its export subsidies take money away from Chinese taxpayers and transfer it to much wealthier U.S. consumers, who benefit from artificially low prices. Americans give up less to get more, and have more money left over for other purchases. All this is at Chinese expense.

Chinese currency manipulation has a similar effect. American consumers have to give up less money to get more stuff. This is a good deal for U.S. consumers, but a bad deal for Chinese consumers, who must give up more and get less to the same degree. And this speaks nothing of the opportunity costs and distorted decision making that accompany distorted prices.

Navarro and Autry also worry about America’s trade deficit with China. They argue against an exhaustive literature explaining why trade deficits are worse than useless as a measure of economic health, going all the way back to Adam Smith and David Ricardo. Countries don’t trade with each other, individual people do. Navarro and Autry assume the opposite. Their aggregate thinking is a common analytical mistake. People won’t make deals with other unless both parties expect to be made better off. Add up all these win-win deals, and it turns out that a lot of people are making win-win deals.

Moreover, this would be the case whether the trade deficit is positive or negative, and whether it is small or large. The trade deficit simply does not measure economic well-being. If anything, it inversely correlates with unemployment. When times are good and unemployment is low, the trade deficit tends to be high. It usually shrinks during recessions, when unemployment is high.

Navarro and Autry fall for the zero-sum fallacy, writing that in U.S.-China trade, “one country wins at the expense of the other’s income, jobs, manufacturing base, and prosperity.” (p. 219) Post-Mao China has experienced rapid growth, and currently enjoys per capita income of about $8,827—the highest it’s ever been. This is up from $959 as recently as 2000. In the U.S., per capita income also grew, increasing more than $22,000 over that time. These numbers are from a World Bank dataset measured in constant U.S. dollars, available here. For one country to have more, it is not necessary for another to have less. Economic growth is just that—growth. The pie gets bigger.

Navarro and Autry are convinced that China is responsible for sky-high American unemployment, writing again and again about China’s “weapons of jobs destruction,” and predict massive unemployment. As of this writing, unemployment is 3.8 percent, which is historically quite low. The unemployment rate will go up and down as the economy goes boom and bust, but overall, trade does not affect the number of jobs. It affects the types of jobs.

Trump’s recent steel and aluminum tariffs, which Navarro has publicly defended, will according to a Trade Partnership study save roughly 33,000 jobs in the steel and aluminum industries, and cost about 179,000 jobs in downstream industries—in the short run. In the long run, employment effects are about nil. Many of those steel workers will probably eventually lose their jobs anyway and find different work elsewhere. Displaced workers in downstream industries will find different jobs, too. But artificial restrictions and distorted prices imposed by the tariffs mean that those jobs will likely create less consumer value, on average, than if the government had left well enough alone. And jobs that create less value tend to pay less. China’s unfair trade policies are a direct result of its autocracy. While Navarro and Autry are right that China needs to both open its markets and free its political system, the trade policies they suggest will not solve the problem.

Other statistics in Death by China are misleading. The late Hans Rosling warns about lonely numbers in his book Factfulness, coauthored with Ola Rosling and Anna Rosling Rönnlund:

Never believe that one number on its own can be meaningful. If you are offered one number, always ask for at least one more. Something to compare it with. Be especially careful about big numbers. (p. 130)

Navarro and Autry give just such a lonely number when they argue that, “On [President George W.] Bush’s watch alone, the United States surrendered millions of jobs to China.” (p. 10) Let’s give that large, lonely number some company. In January 2001, when Bush took office, the U.S. labor force was 143.8 million people. When his term expired in January 2009, it was 154.2 million people, despite the economy being in recession. The data are here.

So even if “the United States surrendered millions of jobs to China,” those losses were outweighed by gains elsewhere, most of which have nothing to do with trade policy. Technological change and changing consumer tastes cause more than six times as much job churn as trade, according to a Ball State University study. The size of the labor force is tied more closely to population size than anything else. Today, after nearly another decade of rapid Chinese economic growth, the U.S. labor force stands at 161.5 million people, a net gain of nearly 18 million since Bush took office. Navarro and Autry have misled the reader about the significance of their lonely number.

Navarro and Autry give another lonely number: “a staggering 750,000 Chinese have settled in Africa over the past decade.” (p. 98) Again, they give no other numbers to compare this to. I’ll fill in the gap. In 2011, the year of Death by China’s publication, Africa had a population of just over 1 billion. Adding 750,000 people to that 1 billion is an addition of less than one person in 1,000, or about 0.075 percent.

Put another way, the city where I grew up, Racine, Wisconsin, has a population of about 77,000. The “staggering” migration Navarro and Autry describe is equivalent to about two Chinese families moving into my hometown per year for 10 years. Now that we have compared Navarro and Autry’s lonely number with other relevant numbers, we can better see how meaningful it is as a guide to policy.

On the next page, Navarro and Autry express worry about “Africa, where there are already over a million Chinese farmers. That’s right, over a million Chinese farmers” (italics in original). They don’t say if any, or how many, of those people are double-counted from the 750,000 number on the previous page. And they again decline to give this lonely number some companions.

Navarro and Autry also tell numerous scare stories about consumer products, quoting on p. 44 from a 2007 Chicago Tribune story that “Despite 55 complaints, seven infants left trapped, and three deaths, it took years for the Consumer Product Safety Commission to warn parents about 1 million flawed cribs.” They do not put these scary numbers in context. In 2007, the overall mortality rate for children under 5 in the U.S. was 7.8 per 1,000 per year. That’s a rate of 0.78 percent per year. Three deaths out of a million flawed cribs is 0.0003 percent. This number, which is 3,846 times less than the general child mortality rate, overstates the danger. And the Chicago Tribune story does not specify how many of those million cribs were Chinese-made. Navarro and Autry do not provide a comparison for mortality rates from cribs made in China versus those made in other countries.

America’s child mortality rate is less than half what it was when China began its economic reforms in 1978. Back then in it was 16.3 deaths per 1,000 children under five. By 2015, the number was 6.5 per 1,000. So by that measure, children in the U.S. are more than twice as safe as they were before Chinese products began flooding American store shelves.

Navarro and Autry also point out appalling environmental conditions in China, noting that, “as China has established itself as the world’s manufacturing floor, it has also turned itself into a toxic waste dump and the world’s most polluted country.” Here they have a point, though it might not be valid for much longer. Initial stages of industrialization are indeed very polluting. But when per capita income reaches a level of $4,500 or $5,000 per person, something changes.

At that level of development, families can begin to stop worrying about where their next meal will come from. They can afford sturdier housing, some health care and transportation, and can afford to send their children to schools instead of the farm or the factory. People can afford to care about environmental quality, and do. From that point on, environmental quality tends to improve as a country gets richer.

Economists who graph pollution against per capita income call this U-shaped curve the environmental Kuznets curve. This pattern has held in country after country, and researchers are finding that that it is also holding true in China. One 2016 study in the journal Energy Policy looks at 28 different measures of environmental quality in China and finds that:

[T]he Environmental Kuznets Curve (EKC) hypothesis is well supported for all three major pollutant emissions in China across different models and estimation methods. Our study also confirms positive effects of energy consumption on various pollutant emissions.

This makes sense. According to World Bank data, China reached that $4,500 threshold in 2010, one year before Death by China’s 2011 publication. So as Navarro and Autry were writing their book, China was at the very nadir of the environmental Kuznets curve. By 2017, per capita income in China had reached $8,827 per person, and continues to climb.

The U.S. reached its $4,500 per person environmental Kuznets curve threshold in 1968, just six years after Rachel Carson’s Silent Spring was published, which Navarro and Autry cite. Today, per capita income in the United States exceeds $59,000, and environmental quality has greatly improved. Even since Death by China’s publication, China’s environment has improved enough to show up in the data, though it clearly still has a long way to go. My colleague Iain Murray’s chapter on the Aral Sea in his book The Really Inconvenient Truths gives another example of this process.

Death by China also contains contradictions. I already mentioned how Navarro and Autry apparently believe in some kind of Schrodinger’s China: they belittle Chinese people as backward and poor while also portraying them as an unstoppable high-tech economic juggernaut. Which is it?

Navarro and Autry also write that “one of the advantages that China has over America is its ability to focus on the long term and think in terms of generations rather than individuals.” (p. 162) But they also have “an almost perfect lack of future vision.” (p. 184) Which is it?

Navarro and Autry are right that China has a repressive government and that its people deserve freedom. They are also right that the Chinese government doesn’t always play fair in international trade. But China has little to gain from military action against the United States, and everything to lose. The right way to encourage China to drop its protectionist and mercantilist policies is not for the U.S. to adopt those same policies, as we are currently doing. It is for us to drop our own trade barriers and liberalize our own economy, and reap the benefits, regardless of how China reacts. Veronique de Rugy of the Mercatus Center recently made this case in a brilliant New York Times column:

President Trump should take a page from Hong Kong. As that territory’s experience demonstrates, and as economists have long argued, lowering trade barriers regardless of other governments’ trade policies fuels domestic economic growth. So if Mr. Trump insists on acting unilaterally, he should cut rather than raise tariffs.

The U.S. would gain economic strength from unilateral free trade, and have more resources to address conservatives’ national security concerns. And we can turn to China and say, “economic and personal freedom is what made us rich. And it is how we are becoming richer still. You’re more than welcome to join us. Here’s how you do it.”

Death by China’s sensationalist tone, weak arguments, erroneous economic reasoning, contradictions, and confusions do a disservice to both the U.S. economy and the cause of Chinese freedom. But Navarro has the president’s ear, and Trump is already enacting some of Death by China’s policy prescriptions. Better for cooler heads to prevail over frustrated men competing over who can appear more hawkish against non-threats.

Advertisements

This Week in Ridiculous Regulations

It was a newsy week, with Justice Kennedy’s retirement announcement, along with some big Supreme Court decisions, including the Janus decision regarding public sector unions; CEI’s Trey Kovacs has plenty to say about that. Meanwhile, the 2018 Federal Register passed the 30,000-page mark and new rules are on pace to exceed last year’s total. Agencies passed new regulations ranging from changing babies to telehealth.

On to the data:

  • Last week, 96 new final regulations were published in the Federal Register, after 77 the previous week.
  • That’s the equivalent of a new regulation every one hour and 45 minutes.
  • Federal agencies have issued 1,667 final regulations in 2018. At that pace, there will be 3,308 new final regulations. Last year’s total was 3,236 regulations.
  • Last week, 1,393 new pages were added to the Federal Register, after 1,283 pages the previous week.
  • The 2018 Federal Register totals 30,773 pages. It is on pace for 61,058 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. Three such rules have been published this year, none in the last week.
  • The running compliance cost tally for 2016’s economically significant regulations is $319.1 million.
  • Agencies have published 54 final rules meeting the broader definition of “significant” so far this year.
  • In 2018, 277 new rules affect small businesses; 15 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.

The Perils of Economic Planning

The real world is too complicated to plan for, or to control. A very Hayekian insight from p. 97 of Ronald Coase and Ning Wang’s How China Became Capitalist:

Many institutions result from human action but not human design; some are intentionally created, with unintended consequences that may overshadow their intended goal.

This Week in Ridiculous Regulations

Summer officially began last week, and federal regulators celebrated with new regulations ranging from almond kernel computing to rough diamonds.

On to the data:

  • Last week, 77 new final regulations were published in the Federal Register, after 57 the previous week.
  • That’s the equivalent of a new regulation every two hours and 11 minutes.
  • Federal agencies have issued 1,571 final regulations in 2018. At that pace, there will be 3,246 new final regulations. Last year’s total was 3,236 regulations.
  • Last week, 1,283 new pages were added to the Federal Register, after 1,317 pages the previous week.
  • The 2018 Federal Register totals 29,715 pages. It is on pace for 61,395 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. Three such rules have been published this year, one in the last week.
  • The running compliance cost tally for 2016’s economically significant regulations is $319.1 million.
  • Agencies have published 53 final rules meeting the broader definition of “significant” so far this year.
  • In 2018, 267 new rules affect small businesses; 15 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.

Last Chance for the 115th: Options for Regulatory Reform

Note: this is my contribution to a series at CEI’s blog. Links to other posts by my colleagues below.

This June here at OpenMarket we’ll be looking at what the 115th Congress, which began January 3, 2017 and runs through January 3, 2019, has accomplished so far and what might still be achieved for limited government and free markets before it’s over. Read more about the Competitive Enterprise Institute’s recommendations for legislative reform here

With a possible party change in play this November in one or both chambers of Congress, the time might be now or never to pass substantive regulatory reform. President Trump is amenable to reform legislation, and both chambers of Congress have GOP majorities. A number of bills are already in play, and some have even passed the House.

While Trump’s early executive orders have helped to slow the growth of new regulations, the next president can undo them as easily as Trump enacted them, with the stroke of a pen. Permanent reform requires Congress to act, and the current favorable political winds might be changing direction as we speak.

I recently compiled a short list of active regulatory reform legislation; nothing has changed since then. I reprint the list below, and encourage Congress to act on them while they still can. And if the GOP retains congressional control past November, there is much more they can do then. For now, this may have to do:

  • REINS Act: This bill, which has passed the House four times now, would require Congress to vote on all new regulations costing more than $100 million per year. The goal is to increase elected officials’ oversight over unelected agency officials’ rulemaking. See also my paper on REINS here.
  • Regulatory Accountability Act: This bill, which has passed the House, packages six reform bills in one. Reforms include stricter disclosure requirements for agencies regarding new rules; making judicial review of regulations easier; stricter disclosure for rules affecting small businesses and nonprofits; require benefit-cost analysis for more regulations; monthly agency reports on upcoming regulations and other activities; and require a plain-language 100-word summary for proposed new regulations.
  • Regulatory Improvement Act: This bill would establish an independent commission to comb through select parts of the 178,000-page Code of Federal Regulations. The Commission would send Congress an omnibus package of redundant, obsolete, or harmful rules to eliminate. The RIA’s lead sponsor is a Democrat, which might make Republicans squeamish about giving the other team a victory. But they should pass the bill anyway. Not only would this be a positive political gesture, it’s a needed housekeeping chore that deserves to be expanded upon in future sessions of Congress.
  • GOOD Act: Neither chamber has passed this bill yet. It would alleviate the problem of regulatory “dark matter” by improving access to guidance documents that agencies issue. Agencies sometimes circumvent the legally required notice-and-comment rulemaking process by simply inserting regulations into these guidance documents.

With the Senate staying in session for most of its usual summer recess, it has no excuse for not at least putting these bills to a vote. They will boost the economy in the short and long run, which sits well with voters. And with a willing executive happy to sign them, they are easy political victories.

Read previous posts in the “Last Chance for the 115th” series:

Minimum Wage Proposal Divides D.C. Workers, Voters

Washington, D.C. has a $12.50 per hour minimum wage, increasing to $13.25 on July 1. But for tip-earning workers, such as servers and bartenders, the minimum is $3.33 per hour ($3.89 as of July 1)—tips are supposed to make up the difference. And if they don’t, then employers make up the shortfall. Ballot initiative 77, due for a vote on Tuesday, would raise tipped workers’ minimum wage to match non-tipped workers’ minimum wage in steps through 2026. It would also index D.C.’s minimum wage to the Consumer Price Index so it would automatically annually increase after it reaches $15.00 in 2020. The proposal has divided the restaurant community.

Both sides have good points. Some restaurant owners favor a set wage because it gives them more stability in planning their costs. Some workers prefer that arrangement, too. They know, coming into work, roughly how much they’ll make on a given shift.

But some restaurant owners would rather pay the low wage, even if they sometimes have to randomly supplement it if business is slow or customers are stingy tippers. It lets them print lower prices on their menus, and there can be tax advantages in reporting lower wages. And some servers also prefer lower wages with higher tips because they walk out of work every night with cash in their pocket. They don’t have to wait two weeks for a paycheck. And if they go the extra mile for a good customer, tips can be very lucrative.

So who’s right? They all are. And that’s why ballot initiative 77 is a bad idea. It’s anti-choice.

Restaurateurs and their employees should be allowed to agree on any working arrangement they both see fit. Nothing is stopping restaurants from having a policy of paying its servers a higher wage and discouraging tipping. If that’s what some people prefer, they should be free to choose it, and are. And if some restaurants and workers prefer the low wage/high tip model, they should be free to pursue that, too. The choice should be made by people, not by legislation.

Customers are just as divided. Some prefer walking into a restaurant knowing that what’s printed on the menu is what they’ll pay. Others prefer being able to reward good service with a high tip, or repay bad service with a small tip. Everyone’s different. And they shouldn’t all be shoehorned into one model.

As for the other part of ballot initiative 77, indexing the minimum wage to inflation so it automatically goes up every year—voters should tread carefully. Some workers will benefit, but at a cost to others. Hour cuts, firings, workers never hired at all, non-wage benefit cuts, cuts to on-the-job perks like free parking and meals, and more are all unintended consequences that follow minimum wage hikes. Iain Murray and I have written about those tradeoffs here and here.

This Week in Ridiculous Regulations

Angry allies, North Korea, and Chinese tariffs dominated the news last week. Under the radar, regulatory agencies closed in on their 1,500th new regulation of the year. The newest batch of rules range from air cargo to dietary fiber.

On to the data:

  • Last week, 57 new final regulations were published in the Federal Register, after 80 the previous week.
  • That’s the equivalent of a new regulation every two hours and 57 minutes.
  • Federal agencies have issued 1,494 final regulations in 2018. At that pace, there will be 3,220 new final regulations. Last year’s total was 3,236 regulations.
  • Last week, 1,317 new pages were added to the Federal Register, after 1,286 pages the previous week.
  • The 2018 Federal Register totals 28,432 pages. It is on pace for 61,276 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. Three such rules have been published this year, one in the last week.
  • The running compliance cost tally for 2016’s economically significant regulations is $319.1 million.
  • Agencies have published 52 final rules meeting the broader definition of “significant” so far this year.
  • In 2018, 256 new rules affect small businesses; 14 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.