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Monday, January 24, 2011

How Obama defines decreasing regulations

The President signed his executive order to limit bureaucratic regulations last week to a bit of fanfare. But there is less to that order than was apparent amidst the President's words about it. The WSJ examined the order and found this proviso included in the wording of the order.
When the agencies weigh costs and benefits, the order says, they should always consider "values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts."

Talk about economic elasticities. Equity and fairness can be defined to include more or less anything as a benefit. Under this calculus, a rule might pass Mr. Obama's cost-benefit test if it imposes $999 billion in hard costs but supposedly results in a $1 trillion increase in human dignity, whatever that means in bureaucratic practice. Another rule could pass muster even if it reduces work and investment, as long as it also lessens income inequality.

Any cost-benefit analysis depends to some extent on matters of judgment, but typically the criteria are more economically tangible, such as how to price risk or the discount rate. No business would recognize Mr. Obama's version, since his "values" loophole boils down to a preference for bigger government. The danger is that his executive order will transform an important tool to check excessive regulation into a way to justify whatever rule the permanent bureaucracy wants.
Boy that's a loophole that liberals can drive a hummer through. Not that they would ever drive a hummer, of course. The WSJ details how the EPA is adding in "environmental justice" as a criteria for judging the effects of its regulations. Poof! Now none of the EPA's regulations fail to pass Obama's cost-benefit analysis.
Ms. Jackson wrote that a new goal for rulemaking, enforcement and permitting is to have "a measurable effect on environmental justice challenges." But these amorphous concepts are not measurable at all. According to this guidance, EPA must nonetheless consider them when estimating the "economic impacts of regulations," and even its scientific analysis should "encompass topics beyond just biology and chemistry." So put on your lab coat and complete a randomized controlled experiment in politics.

Sure enough, EPA justifies its 2009 carbon "endangerment finding" by noting that climate change will "add further stress to an existing host of social problems that cities experience, including neighborhood degradation, traffic congestion, crime, unemployment, poverty, and inequities in health and well-being." Oh, and it will "accentuate the disparities already evident in the American health care system, as many of the expected health effects are likely to fall disproportionately on the poor, the elderly, the disabled, and the uninsured."

So while Mr. Obama wants the country to think a new rigorous empiricism is guiding his government, his appointees can justify any rule that fits their ideological goals. This sounds more like the end of cost-benefit analysis than the beginning.
Look for every corner of the bureaucracy to find some sort of "justice" that is impossible to measure but that justifies whatever they're already doing.

With President Obama, more is usually less. And so it is with his effort to decrease government's regulatory burden.


Pat Patterson said...

Los Angeles used to have a Ford and Chevrolet plant in the downtown area as well as one of the biggest Goodyer plants in the nation. But the same cities that made the city attractive and created a whole generation of a minority middle-class seem intent now in keeping out the kinds of businesses that might solve some of their problems. Then of course they will complain that these good jobs are either being outsourced, unlikely, or moved to states that unfairly are trying to attract new business. Both green and dirty by culling regulations, cheap land and often right-to-work. They often then strike on the tactic of appealing to the state or federal government for funds, with a variety of rationales, to make up for these jobs.

Rick Caird said...

Not only are the benefits impossible to measure, but it is also impossible to even agree on a definition of justice. It is quite telling that Obama wishes to use an undefined term to add an indeterminable "value" to evaluate an unnecessary regulation. Yes, that is just how he thinks.