Regulatory Studies 
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Absurdity of Government Intervention
McDonald's has recently announced major voluntary changes to one of its staple items: Happy Meals. On the flip side, Campbell's is putting salt back into its soups, based on customer feedback. Cato senior fellow Walter Olson explains the correlation between these two changes: "In a sense, both these stories illustrate a basic process of capitalism at work: Businesses are always experimenting with their offerings in hopes of staying current with consumer trends." Contributing to the health of their customers is a driving force in a business, and they have the incentive to make the right decision even without government intervention. Unfortunately, government meddlers continue to intervene in regulating food items based on so-called scientific results that are far less than definitive.
Deregulation Works: Mobile Phone Industry
Mobile phones have exploded with capabilities and features over the past few years, and quality of service has increased dramatically since those vogue bag phones of the 80s. But as Adam Thierer of the Mercatus Center notes, we've seen those increases in performance without an increase in monthly bills. In fact, the average price of mobile phone service has plateaued or even fallen since the 80s. Thierer explains that a "lighter regulatory touch" has led to lower bills and higher capital investment in the industry.
The FCC Should Not Regulate the Internet
Cato information technology scholar Jim Harper says that government involvement in the Internet industry is a bad idea. He bases this on two main reasons. First, the premise for the regulation is wrong; consumers won't simply roll over to the ISPs. They watch their own backs, and even more so as the Internet itself facilitates this process. Second, the major assumption in favor of government regulation is that the regulators are able to do a better job than consumers. Ultimately, says Harper, regulation inhibits the free flow of ideas, and Net Neutrality regulation is therefore a bad idea.
Video: Chuck vs. Government Regulators
The Institute for Justice recently documented how hard it is for entrepreneurs to turn their ideas into businesses in America. What's needed to boost the economy is not government "stimulus," but rather government exodus.
This video documents barriers to entrepreneurship in Milwaukee, L.A., Houston, D.C., Miami, Chicago, Philadelphia, and New York...
Debate: The Role of the State in Online Privacy
In the age of rapid Internet expansion and information-based advertising, personal information available online is a matter of increasing policy concern. Some feel the risks of abuse are a clear call for increased government regulation, while others argue that personal responsibility and market forces will best deal with the rising issues. In a week-long debate on the Economist.com, Cato scholar Jim Harper sides with the market and individual choice. He points out that there are tradeoffs that many are willing to make for the benefits the Internet provides, and people’s preferences vary in a way that regulations would restrict. Stay tuned to the debate here, and offer your comments for the scholars to address.
Private Enterprise Does It Better
"Free enterprise does everything better," is the claim John Stossel makes in an article on privatization. The government is often seen as the default provider of all sorts of so-called public goods. Stossel uses the example of privatization in the transportation industry to show how entrepreneurs improve social well-being by taking risks that pay off. From toll roads, to maintenance, to accident prevention, private parties demonstrate that private entrepreneurs improve conditions and save money in the process. Government acts on the premise of making social order, while the free market relies on catering to the people. Stossel's examples demonstrate that "freedom and responsibility triumph." If we could get government out of the way, imagine the better services, lower taxes, and fewer intrusions in our lives.
Whole-Body Imaging: Intrusion Without Security
Writing for the Foundation for Economic Education, Becky Akers describes the FTA's rollout of full-body imaging in airport screenings, technology that provides a plethora of conversation starters but no dramatic increase in security. The imaging, which reveals practically everything under one's clothes, can be adjusted to protect privacy and only detect dense items, like guns, but then it misses softer items like plastic explosives. Akers conveys the sort of graphic trade-offs such policies will assuredly produce. Hinting at the ballooning costs of broad-scale adoption, Akers offers a solution: entrust security decisions to the professionals rather than politicians. This would not only save tax payers money, but it would also align business interest with safety because “airlines have all the incentive we could ask to institute practical, effective security.”
What's Wrong About Insider Trading?
Cato scholar Doug Bandow raises some questions about the federal laws restricting and punishing insider trading, and calls it “a genuinely stupid thing to do.” Besides the fact that insider trading is the use of the most current information (typically a good thing in market economics), Bandow explains that "The law bizarrely affects only one-half of the trading equation." Only those who act on the information get punished, but those who intentionally do not act receive no oversight.
Despite the incalculable number of insider "non-traders," there is no evidence that they impair the market; why would insider trading be any different? This calls into question the whole concept of sanctions against insider trading, suggesting it may be less about market efficiency and more about artificial fairness by restricting action based on the most current information. (Although, Bandow questions the “fairness” of restricting one person simply for being related to a company exec but not restricting another for using 30 years of intuition and experience.)
Is the Cure Worse than the Disease?
About a month after its passing, truths about Obamacare are emerging. Peter Suderman, of Reason, discusses how the medicine of the new legislation is becoming harder to swallow. The Administration is claiming that success is just around the bend of some new, stronger regulations, but such regulations are projected to be costly – cost being the symptom of the debt disease that has plagued the U.S. and the rest of the world. Suderman notes that, "With each passing day, it looks more likely that costs will go up, businesses will face bureaucratic burdens, and many individuals will lose their current health care plans." All sorts of other costs are emerging the longer the bill is being analyzed.
17 Things to Despise about Government Regulation
At a time when the government is considering more regulation of private business - in the energy, financial, and healthcare industries, it is important to look a little deeper into what that may mean for average Americans. The Foundation for Economic Education, in a couple of articles in their Freeman publication, do just that.
- Richard Fulmer and Robert Bradley lay out fifteen problems with government regulation, saying "Any time government regulators try to do much more than lay out the basic rules of the game, unintended consequences and moral hazards rear their ugly heads."
- In an article on the financial crisis, Peter Lewin, professor at the University of Texas at Dallas, unveils two faulty assumptions of government involvement: 1) the cause of "market" failure, and 2) the nature of regulation itself.
At a time when "regulation" is a term filling many top headlines, it would serve us well to consider time tested lessons, and not repeat the same mistakes.
Offshore Drilling, Still Worth the Risk
Reason science correspondent Ronald Bailey discusses the BP oil spill currently impacting the southern coast of the U.S. and presents a cost/benefit analysis to determine if the U.S. should pursue additional off-shore oil drilling. He warns that many, on both sides of the issue, blow this type of event out of proportion, saying "in deciding whether or not to continue offshore exploration for oil and gas, a calm quantitative approach makes more sense.” In a preliminary analysis of research studies, Bailey finds that opening additional off-shore drilling options, could amount to $323-$967 billion of total benefit, adjusting for both price fluctuations and environmental risk. “Progress is a trial and error process, and increasing safety results from learning how to make better trade-offs over time between risks.”
Friday Event: The Great Copyright Debate
Information technology and intellectual property have become integral parts of everyday life, but how can they blend together in a way that promotes ownership and trade? Cato Director of Information Policy Studies Jim Harper will present at a student forum on the policy considerations of copyright, April 30th, at 4:00pm (EST). The event will be held at the Cato Institute, in Washington D.C., and broadcast live here. The event will be followed by a wine, cheese and beer reception with Cato scholars and staff. Register for free on the link above.
3 Reasons to Legalize Pot
In this Reason.tv video, Nick Gillespie presents three reasons why marijuana should be legalized. Freeing weed would increase tax revenue and decrease law enforcement costs, allow states more sovereignty in their decisions to legislate pot use, and give people the ability to treat their own bodies how they choose. "As the United States enters its 72nd year of marijuana prohibition, it's time to consider legalizing pot once and for all," says Gillespie.
Endangered Findings: the Basis for EPA Intervention may have gone Extinct
The next wave of government intervention into our private lives is expected to come in the form of "environmental" regulations. Cato scholar Pat Michaels describes how the Environmental Protection Agency has been anticipating the opportunity to "dictate how and how much we can drive, fly, consume, or make." However, the precedent for such regulations is based on reports that have had their accuracy questioned over the past year. Michaels presents multiple published findings and journals that document substantial discrepancies with the IPCC report that the EPA is using. The EPA appears to have lost its scientific footing for regulating the lives of hundreds of millions of Americans. However, that does not mean they are not going to try.
IRS to Regulate Healthcare Coverage Under Pending Bill
"Since $290 billion in foregone collections isn't enough to disqualify you from your job, we might as well give you more responsibilities," is what, in essence, Congress' health bills say to the IRS. Peter Suderman of Reason calls attention to an article in Kaiser Health News that discusses new duties to be performed by the IRS under the current healthcare bills. The IRS, in addition to collecting taxes, will be responsible for checking to see if Americans have health insurance, notifying them of missing documents and assigning fines, and collecting those fines. The IRS was never intended to perform this duty, nor should it be. But it is now, under the new healthcare bills circling through Congress. We'll just have to wait and see how the ever-burdened IRS adjusts to the new challenge, and what other freedoms will be sacrificed.
Video: UPS vs. FEDEX—Ultimate Whiteboard Remix
Reason editor Nick Gillespie discusses the current dispute between FedEx and UPS. The two companies are governed by much different rules; based on differences in their business models, UPS experiences much higher labor costs than FedEx, due to government regulation. Instead of pushing for less government interference, UPS is trying to force FedEx under more costly federal labor status. Gillespie explains that UPS is "using legislation to win what they can in the market place." All of this is supported by the all-powerful, anti-business federal government.
Why Not Allowing Guns is Bad Policy
Reason editor Jacob Sullum discusses the recent murderous attack at Fort Hood military base by a renegade soldier. Guns are restricted at the base, as is the policy at most US-based military posts. Sullum contents that this policy allowed the attack to be more deadly than it would have been if other soldiers had their weapons and if Nidal Malik Hasan, the attacker, feared he would face resistance. At many highly vulnerable locations guns are regularly restricted, such as at schools, universities and shopping malls; however, as Sullum notes, these often serve as ideal targets for violent attacks because "crazed killers tend not to follow such rules."
No Thanks, Net Nannies
'Net Neutrality' is a funny way to say 'government control of the internet,' but that's what regulators are calling it. Reason editor Peter Suderman explains the issue, and what's at stake. The government, along with several big businesses who would benefit from such regulation, is trying to strong-arm and mislead the public, saying that regulation is needed to protect the Internet. But Suderman asks, "Isn't it usually true that the best way of preserving a system that's almost universally agreed to be working quite well already is to leave it alone?" Time will tell how well Obama, his administrators and his big business friends get with their pursuit of control. If you thought GM was a big takeover, what about the whole Internet?!
Fighting for Economic Growth
Rising unemployment and growing deficits pose questions for the U.S. economy. Matt Harrison, from The Prometheus Institute, suggests ultimate fighting might hold the answers. Harrison contrasts the mixed martial arts industry with current American policy and government, and explains how the history of UFC has set an example U.S. policy-makers could follow. Through establishing property rights, promoting competition and gains from globalization, and self-regulating, UFC has become a powerhouse of economic growth. Harrison states that, "The key wasn't that UFC needed more rules, it was that it needed the right rules."
The Imperial Presidency Comes in Green, Too
Cato VP Gene Healy addresses how the rising power of the executive president has embolded Obama and his administration to enact 'climate change' regulations, without waiting on congress, or the American people to decide. While one would think a legislature would have to decide this, especially in a democratic country, Healy states that's not true, becasue "existing law still leaves the executive branch enormous discretionary power."
Nanny-State gets Jealous, Punishes Good-will
A Michigan woman is threatened with fines if she continues to charitably watch her neighbors’ kids as they wait for the school bus in the mornings. Cato VP David Boaz addresses this issue in a blog post. The Department of Human Services has told Lisa Snyder that she must get appropriate permits for 'child care' or face fines (even jail time), even though she receives no money and does so as a neighborly gesture to allow the kids’ parents to get to work on time. Boaz presents the case of the nanny-state getting jealous of positive social relationships, and enacting regulations accordingly.
Dan Mitchell describes a similar situation in Britain here.
The Dog Ate Global Warming
Cato scholar Pat Michaels explains that there may be something fishy about the data used in the climate change debate. He demonstrates that the temperature data used in penning legislation and regulations, to a large extent, is hidden or non-existent. Those responsible for the data sets used by government agencies have stated, "we were not able to keep the multiple sources for some sites, only the station series after adjustment." Michaels concludes that if the data don't exist, the science is faulty, and therefore any policy resting on such so-called "science" is bunk.
Cap-and-Trade is Dead, But Alive
Cato scholar Pat Michaels presents the idea that Obama and Congress Democrats can toss out the Waxman/Markey Cap-and-Trade bill and still get what they want. "Thanks to the Supreme Court's landmark decision in Massachusetts v. Environmental Protection Agency (2007), the EPA has authority to issue its own regulations on carbon dioxide," says Michaels, adding that "the president has really had the power to enact its core components on his own all along." Thinking strategically, by using Obama to enact (rather than pass) regulations, those officials seeking re-election can get the results they want while clinging to the anonymity that they need to keep their seats.
Cato Trade Policy Analyst Sallie James lays out the international and business implications of cap-and-trade policies in a podcast, posted here. James states that political figures have “not thought through the implications of what they’re proposing,” concluding that the trade provisions not only are ineffective, they are going to be harmful.
Financial System Needs Less Regulation
Cato scholar Mark Calabria discusses President Obama's approach to reforming the national financial system. He notes that while reform is much needed, the wrong kind of reform will lead to even greater trouble than has been experienced over the past year. About Obama's plans, Calabria says, "The President’s plan chooses convenient targets and protects entrenched interests, rather than address the true underlying causes of the crisis." He notes that not addressing the problems that instigated the bubble and burst in the first place is a grave error. "Without real reform — fixing Fannie and Freddie, scaling back the massive subsidies for leverage in our tax code, loose monetary policy – it will only be a matter of time before the next crisis hits."
Obama, burnin' rubber
After businesses closed on Friday, and average Americans were relaxing and kicking off the NFL premiere weekend, President Obama was in a room signing off on a 35% tariff on Chinese tires, under the guise of protecting "fairness" of trade. The tariff - snuck in amid healthcare debates, giant protests in Washington, and announcements of forthcoming financial regulations - has already raised objections and promised retaliations from China. Warren Meyer, from Coyote Blog, offers some good insights, along with links to other good articles, including one by Irwin Stelzer. Meyer says, "Suppose the Chinese government is massively subsidizing tire exports... What should our response be?" To that question, Meyer believes the correct response is, 'Thank you.'