Tag: regulation

Categories
Accountability folly too much government

Our Limited Abilities Require Other Limits

Last week I asked, in effect, Who regulates the regulators?

It does no good to say “the people,” because — as much as I want government to be ultimately controlled by the people — if you’re like me, you don’t know enough to micro-​regulate high finance.

But there’s something I didn’t mention last Wednesday: The regulators don’t have that knowledge, either.

Even keeping eyeballs on simple fraud turns out to be difficult. Trying to micromanage high finance? Much harder.

But the congenital inability of regulators properly to regulate doesn’t mean that we must consign ourselves to a never-​ending, Sisyphean cycle of boom and bust. 

Many of the instruments of the modern federal government try to do too much. These very institutions, because they hubristically attempt to regulate away boom bust deliver just the opposite. They make sure booms go bust in messy ways. 

Here’s a fresh example: “Lack of regulation” wasn’t the main reason for this latest bust. More important? The “too big to fail” subsidy. By giving Wall Street, big bankers, and financial intermediaries the impression that they would be bailed out in case of implosion, those very same folks behaved in such a way to risk said implosion, and thus needing the bailouts.

Which happened.

Which started the cycle all over.

Only by going back to basics can we improve our long-​term economic outlook — not by government micromanaging the economy.

Nicely, citizens like you and me can understand these “basics.”

And defend them.

This is Common Sense. I’m Paul Jacob.

Categories
folly free trade & free markets national politics & policies too much government

Madison’s Angels to the Rescue?

Something called “behavioral economics” has arisen in recent decades, testing and probing many of the assumptions-​cum-​postulates of basic microeconomics. Researchers have discovered that human beings are prone to biases, cognitive errors, and a whole bevy of choice glitches. We are not perfectly rational.

Shocking, I know.

Some people draw an odd moral from this: Since people are such fools, they require the help of government to regulate them from utter folly and ruin.

Economist David Henderson quotes one of his Facebook friends, TV creative director John Papola, as supplying the “most succinct criticism” of this tack: “Why in the world do behavioral economists who study our flaws and irrational quirks advocate centralized power in the hands of a small group of flawed overlords? If people are irrational, so are government regulators, only they have corrupting monopoly power.”

You’ve seen this kind of argument before, in political theory. James Madison famously noted that 

If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary.

Just so: Were we entirely rational, no regulation would be necessary — no laws would. But, given universal human limitations, the regulators themselves require regulation, and a (non-​existent) supply of non-​biased, error-​resistant rationality, to boot. 

Forget vast reams of regulations and huge teams of bureaucrats. Instead, perfect the basic rule of law, regulating markets by a well-​conceived basic set of rules. 

And expect some imperfection. 

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies

Neutrality or Tragedy?

Everybody likes freebies. New York renters often seek apartments advertised with “utilities included.” Why? So they can run their air conditioners 24/​7.

Similarly, a lot of people are pushing for something called “Net neutrality.” We must guarantee a “free and open Internet,” they say. 

Sounds good. After all, “free” is a good deal, if you can get it. But “free” comes at a cost. “Not having to pay for it” can become “paying through the nose” pretty quickly. 

Here’s the problem: The rise of VoIP, streaming video and audio, and similar broadband luxuries has strained the Internet. Regulating the Net for “neutrality” prevents price and quality-​of-​service discrimination by owners of the Net’s infrastructure. 

Might as well require all landlords to provide all utilities “free” … distributing the costs of extra usage via basic rent charges. That would be “Apartment neutrality.” 

It would also be a big waste, and not just of electricity.

When suppliers of goods aren’t allowed to price and move product to their advantage, we get something  like the “tragedy of the commons.” The term comes from the medieval commons, a field that all villagers could use. They were, historically, overgrazed. Devastated. Hence the need to divvy up the fields into private plots, allowing trade to increase wealth, to the benefit of all.

U.S. regulators, tackling Net neutrality this month, should be wary of laying waste to the Net in the name of “openness.” Never confuse “free” of price with freedom itself.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Hair-​razing!

“Hands up! Drop the clippers! Step awayyyyyyy from the barber chair!”

That might not be exactly what the deputies and inspectors, under color of bureaucratic authority, warbled as they raided at least nine barber shops in Orange County, Florida. But armed men did invade the central-​Florida shops in August and September, and without warrants.

They did arrest “criminal” thatch dispatchers for handling hair despite lack of a license.

The “authority” here was that of the Department of Business and Professional Regulation, whose inspectors were aided in their quest to protect the public from bad trim jobs by the dozen-​plus deputies joining the raids. In a few cases, pot or guns were found along with maleficent lack of licensure. But the pretext was to clamp down on unauthorized peaceful means of making a living. 

In one raid, the barbers of the assailed shop all did have current licenses, but had to sit around in handcuffs while that fact was confirmed.

The Orlando Sentinel notes that most of the 37 people arrested as a result of the “unprecedented” raids were charged with only the misdemeanor of “barbering without a license.” It’s not obvious why anybody would want to divert resources from real crime fighting to conduct such idiotic assaults. Nobody really thinks that barbers habitually graduate from illegal buzz cuts to home invasions and murders. 

I hope the victims consider suing. That might help prevent this travesty from happening again.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets general freedom nannyism too much government

A Tour of Over-Regulation

Want a measure of the regulatory state run amok? 

Recently in the Washington Post, Robert McNamara of the Institute for Justice informed us that “In the 1950s, only about one out of every 20 Americans needed a license to pursue the occupation of their choice. Today, that number is one out of every three.”

Wow. A lot more hoops to jump through to get a job or start a business.

Want to add insult to injury? The actual regulation McNamara was writing about makes it illegal — punishable by three months in the local jail in our nation’s capital — to “describe … any place or point of interest in the District to any person” as part of a tour without first getting a license.

And the license process is no picnic, either. Sure, this past summer the city did repeal the rule requiring a doctor’s certification that the aspiring guide is not a drunkard. But there remain plenty of stupid regulations, including new ones that require guides to be proficient in English. And yes, that applies even to guides who talk to those benighted folk who speak foreign languages.

Applicants must also pass a test on their knowledge of “various facets of Washington life, including architecture, history and regulations.”

Tour guides must be expert in “regulations.”

Even the Washington Post headlined its editorial, “Tour de farce,” suggesting that a system of “voluntary certification” would work better than big government rules. 

Yes. That’s right.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies tax policy too much government

A Plague Upon Small Business

Those who like Big Government tend to dislike Big Business. So it must be just an unintended effect that shiny, new government programs invariably harm small businesses, aiding big ones. 

There are many examples of this. Today’s comes from the biggest new kid on the block, the new health care reform.

Who wins with it? Sure isn’t small business.

The increased paperwork and added regulations especially burden smaller operations. Big corporations can more easily eat the additional costs. Small businesses, on the other hand, have to expend a greater percentage of their gross incomes to meet new requirements, and this drain on their resources means that they can’t compete as well against the big guys, toe-​to-​toe in the marketplace.

Worse yet, even the special tax credits tossed in small businesses’ direction serve up a thorny mess of complexity and arcane paperwork. And while the credits are scheduled to evaporate, there appears no end to soaring costs.

Finally, the new IRS 1099 reporting requirements on business-​to-​business transactions of $600 or more will hit small businesses hard. These new required forms are in effect a tax themselves, because the extra paperwork will cost real money.

Is this any way to improve health care? No. It’s got nothing to do with health care. It’s just a way to increase the tax take and another way Big Government helps Big Business at the expense of the little guys.

And that’s sick.

This is Common Sense. I’m Paul Jacob.