My candidate for the lead question at all debates between presidential, senatorial, and congressional candidates:
“Have you ever thought about the principles which should underlie federal government regulation? If so, what did you conclude?”
I pose these questions because the torrent of federal regulation has become a virtual Niagara waterfall. Former U.S. senator and federal appeals court justice James Buckley reports that there are now 235 volumes of federal regulations in six- or seven-point type that occupy 17 feet of shelf space. We have entered the age of prescriptive government.
Here are a few choice examples at the federal level:
- Healthcare providers can be fined hundreds of thousands of dollars for failing to wipe out discarded copy machine hard drives.
- Universities can’t disclose student grades to parents without the child’s permission. (Senator Buckley was instrumental in enacting this one, much to his later regret.)
- Universities must demonstrate that their spending on athletic teams is following federal government guidelines concerning the percentage that goes to men’s versus women’s sports.
- Local governments are instructed as to the number of housing units that should be made available for “diverse” ethnic groups and lower income households.
- Rare birds/snail darters prevent builders from developing lots they own.
- Light bulb technology is prescribed by the federal government.
- The number of required signatures on documents that are rarely if ever read in their entirety when obtaining a home mortgage is in the double digits.
- Employers are mandated to provide government-designed health insurance to their employees.
- School lunch menus are designed and mandated by the U.S. Department of Agriculture. School-sponsored bake sales are regulated to exclude children’s favorite treats as well.
Freedom of choice. The effect of this state of affairs is to gradually reduce individuals’ freedom of choice. Of course, we are told that in a vast number of situations the “uneducated” need to be restricted in choosing what they wish to do, how they wish to do it, or what they choose to eat. These strictures are enforced not because the individual’s choice will injure someone else (the traditional basis for having government restrict freedom to choose) but because those with coercive power have decided they know what is best for the individual. Prohibiting the sale of large bottles of soft drinks, as the Bloomberg administration in New York City attempted, or chocolate cakes in the case of school bake sales, are classic examples of such behavior.
Such mandates are usually sugar-coated with a faux economic argument along the lines that ‘without such intrusive regulation more people will suffer from diabetes and thus require more healthcare and thus more taxpayer dollars to take care of them.’ The same argument is used to mandate the use of helmets by motorcyclists. In other words, maintenance of the welfare state for the supposedly ignorant is more important than freedom of choice.
The demand for regulation. How did we arrive at this point? Encouraged by campaign donors, most elected officials – of whatever party – devote substantial efforts to shaping the regulatory apparatus as well as promoting spending and taxing initiatives that lead to substantial amounts of additional regulation.
Some regulations, or the laws that underlie them, come about due to horrific, well-publicized calamities and the political pressure to ‘Do Something!’ that follows. The flood of TSA air travel security regulations following 9/11 is an obvious example. Other regulations, like the school lunch and affordable housing examples above, come with federal funding for the activity involved. In these cases, recipients are bribed: they accept taxpayers’ dollars in exchange for agreeing to the regulations.
Most Federal regulation, including that which comes with taxpayer monies, originates in campaigns by well-organized and amply-funded labor, business, and nonprofit pressure groups and the lobbyists they hire. All such parties invoke “the national interest” in some guise or other to advance their cause, no matter how much self-interest may be the true driver. Large corporations tend to be part of the problem. Most of them prefer federal regulation on a specific issue rather than having to deal with fifty different state governments.
Nearly all our senators and members of the House respond to these pressures without any coherent vision about the role of the federal government or the division of power and responsibility between Washington and the states. Nor do they pay much attention to the likely unintended economic consequences of new regulations or how centralizing control of choice in Washington erodes local political institutions, initiatives and freedoms.
Ethanol: a regulatory swamp. The most recent classic example of federal law and accompanying regulation gone amok is the 2007 mandate to use ethanol in gasoline. Promoted as necessary to reduce dependency on foreign oil imports and as a way to reduce ‘greenhouse’ emissions, the initial impact of the regulations was to drive up the global price of corn, enriching American farmers but leading to severe food price hikes and social unrest in many of the poorest countries in Africa. Then it turned out that the reduction in greenhouse gases was almost nil when allowance is made for the resources, including fertilizer, which went into ethanol’s production. Thus, its primary effect has been to increase the cost of ethanol-laced gasoline to consumers and of corn as food.
Today, because of the decline in gasoline consumption, demand for ethanol is far less than originally projected. A legislative mandate that increasing amounts of ethanol and other “biofuels” be blended into gasoline has been delayed by the Environmental Protection Agency. Vast uncertainty about future regulation surrounds ethanol producers, gasoline refiners, and corn farmers. Thank you, Washington.
Five principles for regulating. So, what principles underlying federal regulation should our elected representatives subscribe to? My recommendations:
1. Every time you feel the urge to pass a law and regulate, lie down, take three dozen deep breaths, and review the five following guidelines.
2. Demand that proponents demonstrate that the problem they want to regulate affects the vast majority of Americans, and that it cannot be reasonably dealt with by market forces or state and local governments.
3. Make sure that all substantive unintended consequences have been identified and evaluated carefully.
4. Use taxes rather than subsidies to influence business/consumer behavior. For example, higher gasoline taxes instead of gas mileage standards and mandated ethanol usage would have been far less disruptive and wasteful than the path chosen to deal with the security and environmental issues involved. It also is a more honest and transparent way to acknowledge the cost of dealing with those issues.
5. If, after #1-#4, you still feel that Something Must Be Done, ensure that any legislation contains a “sunset provision” – the law automatically expires after a certain date, e.g. five years in the future, unless it goes through the entire legislative authorization process again.
Surely, instead of weak-kneed bending to special interests and transitory events, when it comes to federal regulation we should insisted that our elected representatives in Washington approach their legislative duties with a coherent set of principles such as basic guidelines suggested above.