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 Regulatory Affairs
 
Obama’s Regulatory Deja Vu
The Independent Institute, United States Thursday, January 27, 2011

William F Shughart Ii
President Obama, in his State of the Union address Tuesday night, was right to focus on the challenges the United States faces as domestic companies try to compete with low-cost global competitors. But he was wrong to suggest that the United States can “win the future” by getting Washington more involved in innovation and education. Federal regulations are as responsible as anything for America’s lagging competitiveness. The solution is not another dose of regulatory review, but a curb of Washington’s regulatory powers, writes William F. Shughart II in The Independent Institute Newsroom.

President Obama, in his State of the Union address Tuesday night, was right to focus on the challenges the United States faces as domestic companies try to compete with low-cost global competitors. But he was wrong to suggest that the United States can “win the future” by getting Washington more involved in innovation and education.

...

Just a week earlier in a Wall Street Journal article, the president elaborated on this, rhetorically declaring a truce with business and laying out the administration’s strategy for moving “toward a 21st-century regulatory system.”

Mr. Obama said this new system would need to strike a balance between the innovativeness, job-creating capacity and robust growth produced by free markets and the responsibility of government to impose “common-sense rules” to protect the public. He called for a “government-wide review of . . . rules already on the books,” and said that “careful consideration” would be given to the costs and benefits of all pending regulations. But as Yogi Berra once said, “This is like deja vu all over again.”

...

In fact, the federal government has been expanding its control of the private economy since the 1890s, on the theory that vulnerable people must be protected from cradle to grave by an omniscient bureaucracy that knows what’s best for them. The growth in regulation typically has been justified by analyses, prepared by the regulatory bureaus themselves, which grossly overstate regulation’s benefits and understate its costs.

...

As examples of his administration’s common-sense approach to regulatory review, Mr. Obama touted a December 2010 Environmental Protection Agency decision to remove the artificial sweetener saccharin from its list of hazardous wastes (one can hear the sigh of relief from diet soft-drink consumers), the adoption of new fuel-economy standards for cars and trucks, and the Food and Drug Administration’s supposedly implemented promise to streamline the approval process for new medical devices.

...

There is no doubt that federal regulations are a mess: multiple departments and agencies, often working at cross-purposes, propose thousands of new rules and regulations each year. The compendium of these regulations, the Federal Register, now runs a mammoth 82,590 pages long.

...

Don’t expect regulatory relief any time soon. The regulatory state is shaped by special-interest-group politics. Regulations rarely are adopted because consumers demand them or because they enhance society’s welfare. Rather, as the now-deceased Nobel laureate George Stigler once famously observed, private firms often lobby for regulations that they believe will give them an advantage over their competitors.

Federal regulations are as responsible as anything for America’s lagging competitiveness. The solution is not another dose of regulatory review, but a curb of Washington’s regulatory powers.

This article was published in the The Independent Institute on Thursday, January 27, 2011. Please read the original article here.
Author : William F Shughart II is a Senior Fellow at The Independent Institute, Frederick AP Barnard Distinguished Professor of Economics at the University of Mississippi, and editor of the Independent Institute book, Taxing Choice: The Predatory Politics of Fiscal Discrimination.
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