Quotulatiousness

April 14, 2016

Why there’s very little “free trade” involved in the TPP

ESR explains why the Trans-Pacific Partnership is such a huge monstrosity of regulations, crony capitalist favours to big business, anti-consumer intellectual property rules, and other mercantilist interventions in trade:

Today there’s a great deal of angst going on in the tech community about the Trans-Pacific Partnership. Its detractors charge that a “free-trade” agreement has been hijacked by big-business interests that are using it to impose draconian intellectual-property rules on the entire world, criminalize fair use, obstruct open-source software, and rent-seek at the expense of developing countries.

These charges are, of course, entirely correct. So here’s my question: What the hell else did you expect to happen? Where were you idiots when the environmentalists and the unions were corrupting the process and the entire concept of “free trade”?

The TPP is a horrible agreement. It’s toxic. It’s a dog’s breakfast. But if you stood meekly by while the precedents were being set, or – worse – actually approved of imposing rich-world regulation on poor countries, you are partly to blame.

The thing about creating political machinery to fuck with free markets is this: you never get to be the last person to control it. No matter how worthy you think your cause is, part of the cost of your behavior is what will be done with it by the next pressure group. And the one after that. And after that.

The equilibrium is that political regulatory capability is hijacked by for the use of the pressure group with the strongest incentives to exploit it. Which generally means, in Theodore Roosevelt’s timeless phrase, “malefactors of great wealth”. The abuses in the TPP were on rails, completely foreseeable, from the first time “environmental standards” got written into a trade agreement.

That’s why it will get you nowhere to object to the specifics of the TPP unless you recognize that the entire context in which it evolved is corrupt. If you want trade agreements to stop being about regulatory carve-outs, you have to stop tolerating that corruption and get back to genuinely free trade. No exemptions, no exceptions, no sweeteners for favored constituencies, no sops to putatively noble causes.

April 13, 2016

The bureaucracy will always be with us

Filed under: Bureaucracy, Europe, Military — Tags: , , , , , — Nicholas @ 02:00

Strategy Page recounts some of the recent the bureaucratic snags between NATO countries in eastern Europe when troops need to cross inter-alliance borders:

In early 2015 Operation Dragoon Ride rolled through Central Europe to send a message to Russians. From March 20th to April 1st, an US Army squadron returning from Atlantic Resolve NATO exercises took an unusual route back to its base in Germany, after spending three months in training facilities in Poland, Lithuania and Estonia. The unit involved was the 3rd Squadron (battalion) of the 2nd American Cavalry Regiment. This unit refers to itself as dragoons (an ancient term for horse mounted infantry) and the movement operation was called Dragoon Ride and the apparent reason for it was to demonstrate to the locals as well as the Russians that American armored units could reach the East European NATO nations by road, as well as by ship, aircraft or rail. Dragoon Ride purposely rode close to the Russian border, often in full view of Russians and Russian media. The American troops frequently stopped in towns and villages so the locals could meet their allies, take pictures and quietly enjoy the pain this demonstration was causing the increasingly aggressive Russians.

But what was not publicized, and what the Russian government knew full well, was that this road movement took the efforts of hundreds of unseen troops and bureaucrats to deal with the paperwork. For all of 2015 it required nearly 6,000 travel documents to be prepared, filed and approved to get foreign military vehicles across East European borders. Some of these documents take several weeks to get approved and operations like Dragoon Ride required hundreds of them and nearly as many NATO local government personnel were involved with this paperwork as were actually participating (500 troops) in the actual Dragoon Ride (of 120 vehicles). While all these rules and approvals would not stop invading Russians they would, in theory, slow down reinforces from the West.

The pile of paperwork and weeks required to handle it were used as very concrete evidence to persuade the East European nations to streamline the process, a lot, or have themselves to blame if reinforcements did not arrive in a timely fashion. As usual a compromise was worked out. Thus eight NFIUs (NATO Force Integration Units) were organized, each consisting of 40 troops trained and equipped to handle the paperwork and traffic control measures required to get military convoys across eastern borders as quickly as possible. The NFIU work out of embassies and stay in constant touch with the border control bureaucracies of the East European nations involved. NFIUs also arrange for rest areas and resupply for the convoys.

March 25, 2016

QotD: The infrastructure problem in America

[David Cay] Johnston’s piece is titled America should be more like Disneyland but instead of thinking seriously about what this means he fumbles on the 20 yard line and concludes that what makes Disneyland different is… happy thoughts. If only we were more like W.D., he says, “we could make America into a happy place.”

No, what makes Disney invest in infrastructure is not happy thoughts. Johnston is in fact clear about this:

    The Walt Disney Co. invests in infrastructure because it makes the company money.

The problem with America is that our public infrastructure has been turned over to a fickle political process that is not governed by a rational calculation of cost and benefit, market test and experimentation but by a pursuit of power, glory and advantage that only rarely coincides with the public interest.

America should be more like Disneyland and to do that we need to develop institutions that allow more infrastructure to built by the private sector. Most ambitiously we need more cities as hotels, more proprietary cities. As Rajagopolan and I wrote in our study of India (in Cities and Private Planning):

    The lesson of Gurgaon, Walt Disney World, and Jamshedpur is that a system of proprietary, competitive cities can combine the initiative and drive of private development with the planning and foresight characteristic of the best urban planning. A proprietary city will build infrastructure to attract residents and revenues. A handful of proprietary cities built within a single region will create a competitive system of proprietary cities that build, compete, innovate, and experiment.

Alex Tabarrok “How to make America more like Disneyland”, Marginal Revolution, 2014-12-17.

March 8, 2016

QotD: The Civil Works Administration, the Works Progress Administration and the Wagner Act

Filed under: Bureaucracy, Economics, History, Quotations, USA — Tags: , , , — Nicholas @ 01:00

Roosevelt created the Civil Works Administration in November 1933 and ended it in March 1934, though the unfinished projects were transferred to the Federal Emergency Relief Administration. Roosevelt had assured Congress in his State of the Union message that any new such program would be abolished within a year. “The federal government,” said the President, “must and shall quit this business of relief. I am not willing that the vitality of our people be further stopped by the giving of cash, of market baskets, of a few bits of weekly work cutting grass, raking leaves, or picking up papers in the public parks.”

But in 1935 the Works Progress Administration came along. It is known today as the very government program that gave rise to the new term, “boondoggle,” because it “produced” a lot more than the 77,000 bridges and 116,000 buildings to which its advocates loved to point as evidence of its efficacy. The stupefying roster of wasteful spending generated by these jobs programs represented a diversion of valuable resources to politically motivated and economically counterproductive purposes.

The American economy was soon relieved of the burden of some of the New Deal’s excesses when the Supreme Court outlawed the NRA in 1935 and the AAA in 1936, earning Roosevelt’s eternal wrath and derision. Recognizing much of what Roosevelt did as unconstitutional, the “nine old men” of the Court also threw out other, more minor acts and programs which hindered recovery.

Freed from the worst of the New Deal, the economy showed some signs of life. Unemployment dropped to 18 percent in 1935, 14 percent in 1936, and even lower in 1937. But by 1938, it was back up to 20 percent as the economy slumped again. The stock market crashed nearly 50 percent between August 1937 and March 1938. The “economic stimulus” of Franklin Roosevelt’s New Deal had achieved a real “first”: a depression within a depression!

The stage was set for the 1937–38 collapse with the passage of the National Labor Relations Act in 1935 — better known as the Wagner Act and organized labor’s “Magna Carta.” To quote Hans Sennholz again:

    This law revolutionized American labor relations. It took labor disputes out of the courts of law and brought them under a newly created Federal agency, the National Labor Relations Board, which became prosecutor, judge, and jury, all in one. Labor union sympathizers on the Board further perverted this law, which already afforded legal immunities and privileges to labor unions. The U.S. thereby abandoned a great achievement of Western civilization, equality under the law.

Armed with these sweeping new powers, labor unions went on a militant organizing frenzy. Threats, boycotts, strikes, seizures of plants, and widespread violence pushed productivity down sharply and unemployment up dramatically. Membership in the nation’s labor unions soared; by 1941 there were two and a half times as many Americans in unions as in 1935.

From the White House on the heels of the Wagner Act came a thunderous barrage of insults against business. Businessmen, Roosevelt fumed, were obstacles on the road to recovery. New strictures on the stock market were imposed. A tax on corporate retained earnings, called the “undistributed profits tax,” was levied. “These soak-the-rich efforts,” writes economist Robert Higgs, “left little doubt that the president and his administration intended to push through Congress everything they could to extract wealth from the high-income earners responsible for making the bulk of the nation’s decisions about private investment.”

Higgs draws a close connection between the level of private investment and the course of the American economy in the 1930s. The relentless assaults of the Roosevelt administration — in both word and deed — against business, property, and free enterprise guaranteed that the capital needed to jumpstart the economy was either taxed away or forced into hiding. When Roosevelt took America to war in 1941, he eased up on his anti-business agenda, but a great deal of the nation’s capital was diverted into the war effort instead of into plant expansion or consumer goods. Not until both Roosevelt and the war were gone did investors feel confident enough to “set in motion the postwar investment boom that powered the economy’s return to sustained prosperity.”

Lawrence W. Reed, “The Great Depression was a Calamity of Unfettered Capitalism”, The Freeman, 2014-11-28.

February 13, 2016

QotD: Education

Filed under: Bureaucracy, Humour, Quotations — Tags: , — Nicholas @ 01:00

I put the donkey ears on “teaching” to this purpose. I do own a tweed jacket, though as a priestly colleague has pointed out, it lacks the regulation elbow patches. That is about the extent of my formal credentials as a pedagogue, yet by unlikely fate I have found myself “teaching” sometimes, at the “post-secondary” level, on a variety of topics — from development economics, to science and scientism in Hellenistic times, to the elements of typography, to the prehistory of modern journalism, to proper English Lit — and these days will do almost anything for money.

My father was also reduced to teaching, on several occasions — medicine, for instance — in addition to art, when it was discovered in a certain developing country that he actually knew some anatomy, and had access to a nursing textbook belonging to my mother.

From him, I learned to cite Hippocrates: “First do no harm.” The young, shall we call them, have almost invariably greater capacities for learning than will be revealed in modern schools. This is not only because their wee minds are therein seldom teased nor challenged. It is also because subjects are taught to them in a methodically lethal way, dispensed in cubes from the intellectual freezer, by teachers who, as a general rule, know nothing of the subjects themselves. (They have specialized degrees in “education.”)

I retain vivid memories of a Canadian high school where best efforts were made to kill my budding interests in poetry, theatre, music, art, biology, physics, math, &c.

There are, as George Bernard Shaw once counted, two basic methods of teaching. One is “education through art,” in which the student learns essentially through mimesis, by doing and making, gradually unfolding himself, as a flower to the sun in the moist air, feeding upon the nutrients beneath him — rich soils collecting through time. And the other is through torture. Each has its own standards. (I’m not against torture as a last resort.)

The expression “education through art” could easily mislead the literal-minded, who may not realize that science is an art. One acquires science by doing science, starting at the most rudimentary level, with small children, magically enthralled. Moreover, the various subjects are entwined. To master biology, for instance, one must learn to draw, in order to observe with precision. Physics, which naturally pairs with math, also pairs with music, which turns to pair with dance. The art of writing requires the art of reading, but vice versa equally so. And as throughout this world, while body and soul stay united, form has everything to do with content; meaning everything to do with style. Neither, and nothing, can be “prioritized”: until it comes time for the waterboarding.

“First do no harm.” God has set before every teacher this anciently humane instruction. Even if he should fail to do a student any good, at least do no evil. Do not repel him from the book forever; nor clutter his head with falsities. Even the torture should be carefully administered, leaving a prospect of some better way, and the happier alternative of following it.

David Warren, “Sigrid Undset”, DavidWarrenOnline.com, 2014-12-04.

January 4, 2016

QotD: The Science Czar

Filed under: Bureaucracy, Media, Quotations, Science — Tags: , , — Nicholas @ 01:00

I have noticed a tendency of mine to reply to arguments with “Well yeah, that would work for the X Czar, but there’s no such thing.”

For example, take the problems with the scientific community, which my friends in Berkeley often discuss. There’s lots of publication bias, statistics are done in a confusing and misleading way out of sheer inertia, and replications often happen very late or not at all. And sometimes someone will say something like “I can’t believe people are too dumb to fix Science. All we would have to do is require early registration of studies to avoid publication bias, turn this new and powerful statistical technique into the new standard, and accord higher status to scientists who do replication experiments. It would be really simple and it would vastly increase scientific progress. I must just be smarter than all existing scientists, since I’m able to think of this and they aren’t.”

And I answer “Well, yeah, that would work for the Science Czar. He could just make a Science Decree that everyone has to use the right statistics, and make another Science Decree that everyone must accord replications higher status. And since we all follow the Science Czar’s Science Decrees, it would all work perfectly!”

Why exactly am I being so sarcastic? Because things that work from a czar’s-eye view don’t work from within the system. No individual scientist has an incentive to unilaterally switch to the new statistical technique for her own research, since it would make her research less likely to produce earth-shattering results and since it would just confuse all the other scientists. They just have an incentive to want everybody else to do it, at which point they would follow along.

Likewise, no journal has the incentive to unilaterally demand early registration, since that just means everyone who forgot to early register their studies would switch to their competitors’ journals.

And since the system is only made of individual scientists and individual journals, no one is ever going to switch and science will stay exactly as it is.

Scott Alexander, “Reactionary Philosophy In An Enormous, Planet-Sized Nutshell”, Slate Star Codex, 2013-03-03.

December 28, 2015

QotD: Nuremburg revised

Filed under: Bureaucracy, Humour, Law, Quotations — Tags: — Nicholas @ 01:00

It takes a while, sometimes, for news to reach me from Kampala, Uganda. But a correspondent alerts me, this morning, to the result of the Review Conference of the International Criminal Court, declared on Saturday, 12th June, 2010. It is big news indeed: signatories have agreed to make starting a war into a grave international criminal offence. Henceforth, anyone who starts one goes straight to The Hague, to be disciplined for his improper behaviour. This means he could face years of hearings. Surely, knowing that will stop aggressors dead in their tracks.

How relieved one feels, to know there will be no more wars.

As my correspondent mentions, this may seem a small thing in the labour of ages. But it is a first step, a “baby step,” decisively in the right direction.

I entirely agree, and look forward to further efforts by the United Nations, on behalf of the ICC. For I think they should also have laws against earthquakes, floods, and tornadoes.

David Warren, “Nuremberg revised”, DavidWarrenOnline.com, 2014-12-05.

December 24, 2015

Repost – Hey Kids! Did you get your paperwork in on time?

Filed under: Bureaucracy, Humour — Tags: , — Nicholas @ 03:00

If you hurry, you can just get your Santa’s Visit Application in before the deadline tonight!

December 13, 2015

The TPP is pretty far from being a genuine “free trade” deal

Filed under: Bureaucracy, Business, Economics, Environment — Tags: , , , — Nicholas @ 03:00

Last week, Kevin Williamson attempted to explain why the Trans Pacific Partnership isn’t all that similar to an actual “free trade” agreement (and why that’s so):

Prominent among the reasons to look askance at TPP is that its text calls for the incorporation — sight unseen — of whatever global-warming deal is negotiated at the conference currently under way in Paris. It is one thing for a trade deal to incorporate changes to environmental practices — regulatory differences are an inhibitor of truly liberal trade — but there is a world of difference between incorporating specific environmental policies and incorporating environmental policies to be named later.

It would be preferable if we could simply enact a series of bilateral “Goldberg treaties,” so called in honor of my colleague Jonah Goldberg, who argued that an ideal free-trade pact would consist of one sentence: “There shall be free trade between …” But the unhappy reality is that the snouts of the nations’ sundry regulatory apparatuses are so far up the backsides of various industries and economic sectors that sorting them out requires thousands of pages of text. Consider, for example, the problem of defense-acquisition practices. Some countries have rules mandating that defense procurement be restricted to domestic firms, and some countries don’t. Coming up with a harmonized, one-size-fits-all approach is difficult; we Americans, accustomed as we are to operating in an economy that produces the best of almost everything in the world, sometimes forget that there are countries with no domestic aerospace industry or sophisticated manufacturers of military materiel. Of course Kuwait goes abroad for military gear; if memory serves, at one point their air force uniforms were made by Armani.

[…]

All of which is to say, we should expect trade deals, especially multi-lateral trade deals, to be complex, and we should expect environmental and labor standards, along with government procurement procedures and the like, to be part of the accord. There’s no getting around it. And, again, there is nothing wrong in principle with using trade accords, which have real economic bite, as a critical instrument for enforcing environmental rules and other regulatory reforms that are incorporated into trade relationships. But using TPP to commit the United States to whatever is cooked up in Paris, without an additional vote in Congress, is a poor tradeoff. It’s not often that I will turn up my nose at a trade deal — even far-from-perfect trade pacts are generally desirable — but here we should draw the line. TPP was negotiated, Congress and the public have had a chance to review the text, and Congress should reject it. That’s the system working, not the system failing to work. It’s why we have votes.

December 12, 2015

The US government’s no-fly list

Filed under: Bureaucracy, Government, USA — Tags: , , , , , — Nicholas @ 02:00

Kevin Williamson on the travesty that is the no-fly list:

There are many popular demons in American public life: Barack Obama and his monarchical pretensions, Valerie Jarrett and her two-bit Svengali act, or, if your tastes run in the other direction, the Koch brothers, the NRA, the scheming behind-the-scenes influences of Big Whatever. But take a moment to doff your hat to the long, energetic, and wide-ranging careers of three of our most enduring bad guys: laziness, corruption, and stupidity, which deserve special recognition for their role in the recent debates over gun control, terrorism, and crime.

The Democratic party’s dramatic slide into naked authoritarianism — voting in the Senate to repeal the First Amendment, trying to lock up governors for vetoing legislation, and seeking to jail political opponents for holding unpopular views on global warming, etc. — has been both worrisome and dramatic. The Democrats even have a new position on the ancient civil-rights issue of due process, and that position is: “F— you.” The Bill of Rights guarantees Americans (like it or not) the right to keep and bear arms; it also reiterates the legal doctrine of some centuries standing that government may not deprive citizens of their rights without due process. In the case of gun rights, that generally means one of two things: the legal process by which one is convicted of a felony or the legal process by which one is declared mentally incompetent, usually as a prelude to involuntary commitment into a mental facility. The no-fly list and the terrorism watch list contain no such due process. Some bureaucrat somewhere in the executive branch puts a name onto a list, and that’s that. The ACLU has rightly called this “Kafkaesque.”

Here’s where our old friends laziness and stupidity play a really prominent role: The no-fly list is not composed of identities, but merely names. Lots of people share the same name. So, for instance, the late Senator Ted Kennedy ended up on the no-fly list, because somebody had used his name (or a similar name) as an alias. Among people called “Kevin Williamson,” we find myself, the famous Scream screenwriter, a notable Scottish politician and political activist (he is also the author of Drugs and the Party Line), a Canadian entertainment journalist, a fine woodworker who sells his wares on Twitter, and a famous underwear model for whom I am unlikely to be mistaken. If a trip to the DMV or the IRS one day eventually sends me over the edge into full-on barking mad durka-durka-Mohammed-jihad territory, those other Kevin Williamsons are going to suffer simply because we share a name.

And, of course, every third actual dirtbag terrorist has the same name as a million other ordinary schmoes, because Arabic names tend to be a little repetitive. (Is there a Mohammed al-Mohammed in the house? Seriously, go to LinkedIn and see how many graphic designers and accountants walking this good green Earth share that name.)

December 10, 2015

QotD: Freelance writing

Filed under: Bureaucracy, Media, Quotations, USA — Tags: , , — Nicholas @ 01:00

A few years ago, I was called upon to inform the IRS that a former employee of mine would have liked to be paid more than I had paid him. Given that I have never met a freelance writer who thought he was being paid enough, I thought it a strange request, but I eventually understood the IRS’s line of thinking: The gentleman in question, who was in his 80s at the time, had retired from his former occupation and worked as a freelance writer. His beat involved a great deal of travel, and he deducted the expenses for which he was not compensated — which, the state of the newspaper industry being what it is, was all of them, at least as far as my editorial budget was concerned. The IRS suspected that his writing gig was somehow phony, something he had invented simply for tax deductions. In truth, he was just a freelance writer who didn’t make a lot of money — i.e., a freelance writer indistinguishable from about 88.8 percent of all freelance writers.

Kevin D. Williamson, “Mottos for Miscreants”, National Review, 2014-11-20.

December 3, 2015

Medical charities and their prime mission

Filed under: Bureaucracy, Health — Tags: , , — Nicholas @ 05:00

David Warren is rather a skeptic on the long-term usefulness of big medical charities (and not just because, like any big bureaucracy, sooner or later the primary goal becomes for the organization itself to survive and grow rather than pursuing whatever they were originally created to do):

Medical “research” does similar direct damage. Huge foundations are created to “fight” every imaginable human ailment, and find new ones on which to build fresh fundraising efforts, should any of the old ones go stale. Grand sums are expended on “public awareness” campaigns, to encourage hypochondria and psychosomatic disorders. (I suspect, for instance, that the chief cause of lung cancer today is grisly health warnings on packets of cigarettes.) Money is raised in billions to “find a cure” for whatever. (Snake oil sales were on a much smaller scale.)

At the most elementary level, people should try to understand cause and effect. Vast numbers come to rely upon the metastasis of these soi-disant “charitable” bureaucracies. And if a cure is ever found, they will all be out of their overpaid jobs. Moreover, it is almost invariably some isolated, eccentric, unqualified and unfunded tyro, who makes the fatal discovery. That is why one of the principal tasks of any large medical foundation is to locate these brilliant “inventor” types, and sue them into surrender.

Does gentle reader know that almost all the increase in human longevity, over the last century or so, can be attributed to people washing their hands and taking showers? And most of the rest to better sewage disposal? Or that it took until almost the middle of the last century for life expectancy in the West to rise to levels last seen in the parish records of the Middle Ages? Which was when “modern” hygienic practices were last observed. (Large, centralized hospitals are the most efficient spreaders of infection today.)

Painkillers are nice, and I’m inclined to keep them, only if we realize that the blessing is mixed. They turn our minds away from futurity; they displace faith in God, to faith in doctors. They create the mindset that embraces “euthanasia.”

Of course, the main focus of contemporary liberal “philanthropy” is not on saving lives at all; rather on killing off babies — in Africa, by first choice. It is what the proggies used to call “population control,” until they invented better euphemisms. That is what truly gladdens the peons in the foundations of all the Bills and Melindas; and lights the corridors of the United Nations. That and the (still historically recent) “climate change” agenda.

November 25, 2015

Food labelling laws and craft brewing … not a match made in heaven

Filed under: Bureaucracy, Business, Health, USA — Tags: , — Nicholas @ 03:00

Eric Boehm on how well-intentioned laws can still have significant and unforeseen negative side-effects:

Brewers are facing the prospect of spending potentially thousands to determine calorie counts for every variety of beer produced. Unless they spend the money to provide the information, breweries may never get their products into chain restaurants, like Buffalo Wild Wings and Applebee’s.

As is often the case with regulations, smaller breweries stand to lose the most.

“A regional craft brewer or a major brewery can spread the cost over a much larger volume of sales and it’s not so unreasonable for them,” said Paul Gatza, a former brewer who now heads the Boulder, Colorado, based Brewers’ Association, an industry group.

“Smaller guys that are just trying to sell a keg or two here or there, they have a decision to make on whether it is worth the additional cost to try to get their beers into chain restaurants,” Gatza told Watchdog.

The Food and Drug Administration is in the process of finalizing menu labeling rules that were part of the Affordable Care Act. Intended to make Americans more aware of their dietary choices, the rules are subject to controversy on several fronts, and the FDA announced in September that implementation of the new rules would be pushed back one full year, until December 2016, as the feds try to work out the kinks.

My favourite local brewery isn’t even a micro-brewery (they’re somewhere between a pico- and a nano-brewery): every week when I drop in, there are three or four new batches ready to sample (and it’s rare that there’s anything left of last week’s offerings). If they had to spend hundreds or even thousands of dollars to comply with detailed labelling requirements for every small batch they brewed, they’d never stand a chance of making a profit. I understand the urge to ensure that people have a chance to avoid ingredients that might make them ill, but this is the sort of regulation that tilts very heavily toward the big companies that have regional or national markets. A thousand dollars per product isn’t even a drop in the bucket to them, while to a small local business, that might be more than their profit margin when you require it be done for everything they produce.

November 20, 2015

Here’s a very disturbing economic issue

Filed under: Bureaucracy, Business, Economics, USA — Tags: , — Nicholas @ 03:00

At Coyote Blog, Warren Meyer shares his concerns about the constantly increasing regulatory burden of American business:

5-10 years ago, in my small business, I spent my free time, and most of our organization’s training time, on new business initiatives (e.g. growth into new businesses, new out-warding-facing technologies for customers, etc). Over the last five years, all of my time and the organization’s free bandwidth has been spent on regulatory compliance. Obamacare alone has sucked up endless hours and hassles — and continues to do so as we work through arcane reporting requirements. But changing Federal and state OSHA requirements, changing minimum wage and other labor regulations, and numerous changes to state and local legislation have also consumed an inordinate amount of our time. We spent over a year in trial and error just trying to work out how to comply with California meal break law, with each successive approach we took challenged in some court case, forcing us to start over. For next year, we are working to figure out how to comply with the 2015 Obama mandate that all of our salaried managers now have to punch a time clock and get paid hourly.

Greg Mankiw points to a nice talk on this topic by Steven Davis. For years I have been saying that one effect of all this regulation is to essentially increase the minimum viable size of any business, because of the fixed compliance costs. A corollary to this rising minimum size hypothesis is that the rate of new business formation is likely dropping, since more and more capital is needed just to overcome the compliance costs before one reaches this rising minimum viable size. The author has a nice chart on this point, which is actually pretty scary. This is probably the best single chart I have seen to illustrate the rise of the corporate state:

decline-of-new-business-employment

November 18, 2015

A maple-flavoured world’s first?

Filed under: Bureaucracy, Business, Cancon, Government — Tags: , — Nicholas @ 04:00

On the Mercatus Centre site, Laura Jones points out an unexpected Canadian first:

Canada recently became the first country in the world to legislate a cap on regulation. The Red Tape Reduction Act, which became law on April 23, 2015, requires the federal government to eliminate at least one regulation for every new one introduced. Remarkably, the legislation received near-unanimous support across the political spectrum: 245 votes in favor of the bill and 1 opposed. This policy development has not gone unnoticed outside Canada’s borders.

Canada’s federal government has captured headlines, but its approach was borrowed from the province of British Columbia (BC) where controlling red tape has been a priority for more than a decade. BC’s regulatory reform dates back to 2001 when a newly elected government put in place policies to make good on its ambitious election promise to reduce the regulatory burden by one-third in three years. The results have been impressive. The government has reduced regulatory requirements by 43 percent relative to when the initiative started. During this time period, the province went from being one of the poorest-performing economies in the country to being among the best. While there were other factors at play in the BC’s economic turnaround, members of the business community widely credit red tape reduction with playing a critical role.

The British Columbia model, while certainly not perfect, is among the most promising examples of regulatory reform in North America. It offers valuable lessons for US governments interested in tackling the important challenge of keeping regulations reasonable. The basics of the BC model are not complicated: political leadership, measurement, and a hard cap on regulatory activity.

This paper describes British Columbia’s reforms, evaluates their effectiveness, and offers practical “lessons learned” to governments interested in the elusive goal of regulatory reform capable of making a lasting difference. It also offers some important lessons for business groups and think tanks outside government that are pushing to reduce red tape. These groups can make all the difference in framing the issue in such a way that it can gain wide support from policymakers. A brief discussion of the challenges of accurately defining and quantifying regulation and red tape add context to understanding the BC model, and more broadly, some of the challenges associated with effective exercises in cutting red tape.

While I’m a huge fan of reducing the regulatory burden in theory, I can’t help but expect to be disappointed about the implementation in reality… (however, should the federal bureaucracy somehow manage to perform nearly as well as the BC experiment, it’ll be Justin Trudeau getting the credit for it, rather than Stephen Harper — but better that the country benefits as a whole rather than the former PM gets boasting rights.)

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