Can Government Spending Be Cut After All?

"What if we can't make government smaller?" the Niskanen Center's Will Wilkinson asks. He says that the evidence, particularly Wagner's Law, shows that government spending is impervious to political assault, and libertarians should make their peace with big government. Instead, libertarians should focus on reforming regulations to foster competition and the market process. I have …

Research Questions for Economics Graduate Students

Are you an economics graduate student casting about for dissertation topics? I have a few ideas for you. As part of the rewriting of Freedom in the 50 States, I've been reviewing the economic literature on how various public policies affect consumer and producer surplus, deadweight loss, and so on. We use an estimate of …

A Clean Win for Freedom (updated)

Even a small win for rolling back the state is so seldom observed that it's worth mentioning when one happens: the medium-sized town of Portsmouth, New Hampshire (one of the most "progressive" municipalities in the state) has abolished all taxi regulations and shut down its Taxicab Commission. Correction: the regulators voted to abolish themselves, but …

Of Cupcakes and Progressivism’s Ratchet

George Will (Washington Post) has an interesting essay on “progressivism’s ratchet.” His “Cupcake Postulate” illustrates the dynamic: federal school lunch subsidies lead to regulation of food content,which justifies the regulation of competing foods from vending machines, and—finally—whether cupcakes sold at bake sales meet federal standards. Government authority spreads—“the cupcake-policing government” finds “unending excuses for flexing its …

Charting Regulation

Much of the work I do is in the area of regulation. It is always a challenge to convey how much the regulatory state has grown (yes, I know, we can count the pages in the Federal Register). Two scholars as the Mercatus Center (Patrick McLaughlin and Omar Al-Ubaydli) have developed RegData, a wonderful tool …

America’s License Raj

The "license Raj" is an epithet often used for India's byzantine code of rules and regulations on businesses under the central-planning system finally dismantled in part in the 1990s. The Economist applies the term to the United States, which buries entrepreneurs under layers of federal, state, and local red tape. According to the Competitive Enterprise …

Toward the Next Financial Crisis?

In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act “to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘too big to fail’, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for …

Income Inequality Doesn’t Matter

Roger Koppl argues this week at ThinkMarkets that “Income inequality matters.” He thinks it matters so much that he says it twice. He believes “Austrian,” pro-market, economic liberals should be speaking up more on this “central issue.” I think Koppl could not be more wrong. The issue deserves all the inattention we can muster for …

A Case for Regulation? The Consumer Financial Protection Bureau

The standard account of regulation focuses on problems of market failure. One form of market failure stems from information scarcity or informational asymmetries. Regulations can deal with this kind of market failure by requiring information disclosure using standard metrics, often in a form that is assessable to relatively unsophisticated actors.  This form of regulation can …

Regulating the Wrong Things?

As the debates over regulating guns continue to gain speed in the wake of the mass shooting in Connecticut, attention has turned (as one might expect given the circumstances) to assault weapons. One problem is the difficulty on defining one’s terms. As Erica Goode explains in an enlightening piece in the NYT (“Even Defining ‘Assault …

Another Take on the War on Drugs

I find this to be an interesting and frustrating topic. Let me take a somewhat different approach to it, one that I use when I engage the issue in a policy class I teach. I begin with two assumptions. There is a universal desire for intoxication among human beings. This is clearly exhibited by the …

The Lesson of Newtown

As a resident of Connecticut, I have followed the events surrounding the Newtown shooting with great interest and sadness. By way of full disclosure, I am a hunter. When I was a child in Wisconsin, my father took his sons to gun safety classes taught in the basement of the local police department. Both of …

Intrade Banned in the U.S.

A casualty of "pro-consumer" financial regulation. John Stossel is on the story: Today, Americans were told that they must close their Intrade.com accounts. That happened because the federal government agency known as the "Commodity Futures Trading Commission" (CFTC) today sued the prediction market, where people from all over the world bet about things like who …

Building Good Will and the Financial Crisis

There is an interesting piece by John Bresnahan (Politico) on Countrywide Financial’s VIP Program, which provided loans to members of Congress, staffers, and executive branch officials who were responsible for shaping regulatory legislation. More than a half a dozen current and former lawmakers, including Senate Budget Committee Chairman Kent Conrad (D-N.D.) and House Armed Services …

The Limits of Congressional Gridlock…and Reform?

It seems that all we have heard of late is about the sharp partisan battles in Congress that have placed it in a gridlock and prevented it from working in a bipartisan fashion to “do the nation’s business.” Yes, the “do nothing Congress.” But there are exceptions to this description.  Given the depth and severity …

CEOs vs. Small Business Owners on Which Policies Make for a Business-Friendly Climate

What do big businesses and small businesses want from government? Pretty much the same thing.

IJ Releases Occupational Licensing Study

The Institute for Justice has just released a new study of occupational licensing requirements in the 50 states and D.C. These requirements disproportionately harm low- and moderate-income people who are seeking to ply a trade. License to Work finds that Louisiana licenses 71 of the 102 occupations, more than any other state, followed by Arizona …

Zoning as Inefficient Redistribution

Interesting to see this come out of the center-left Brookings Institution: Anti-density zoning — embodied in lot-size and density regulations--is an extractive institution par excellence. Through the political power of affluent homeowners and their zoning boards, it restricts private property rights — the civic privilege to freely buy, sell, or develop property — for narrow …

Regulatory Sprawl

The new edition of the Economist  has some rather entertaining articles on regulation in the US (the cover story: “Over-regulated America”). Little in the articles will come as a surprise to scholars of regulation. But there are many entertaining examples of regulatory sprawl and complexity. Some examples: “The Federal Railroad Administration insists that all trains must …

Global Regulation Epidemic, on Freedom Watch

Here is a clip from Tuesday night's "Freedom Watch" with Judge Andrew Napolitano. (Freedom Watch airs nightly on the Fox Business Network. If you don't get FBN, contact your television provider!) The topic was a Reuters paper claiming that 14,215 new regulatory rules were put in place on businesses worldwide in 2012. I was one of …

A Message to OWS: Follow the Money

The President has been providing moral support for the OWS protesters during his recent appearances.  How genuine is this support? One might take a clue from the Watergate era’s deep throat and “follow the money.” Thanks to a piece in today’s WaPo, this is not a difficult task. As Dan Eggen and T.W. Farnam report: …

Land-Use Regulation and Growth

I want to piggy-back here on Mark's great post on urban planning and the poor. I've been playing around with some state-level data on local land-use regulations and cost of living. The last decade in the U.S. has been one of very slow productivity growth. As a result, fast-growing states tend to be those with …

Do Politicians Regulate When They Can’t Spend?

Noel Johnson, Matt Mitchell, and Steve Yamarik have a new working paper answering that question in the affirmative. They look at state fiscal and regulatory policies and find that Democrats generally like to increase taxes and spending when in control of state houses and Republicans do the reverse. But when states have tough balanced-budget requirements …

When Lawn Nazis Attack

Last year I had a little run-in with the town authorities over my garden. Fortunately, it ended well. However, for other people around the continent troubles with the local lawn nazis seem more severe, possibly involving jail time! Some of you may have heard of the woman in Oak Park, Michigan who faced jail time …

Interposition: Part Seven: The Embargo and Noncooperation

With the war in Europe between France and England intensifying, Americans found their rights as neutral traders regularly violated by both French and British navies, and French and British port restrictions further limited American opportunities for commerce. To make matters worse, on numerous occasions, English vessels had boarded American ships and “impressed” many of their …

Ronald Coase: On the Market for Goods and the Market for Ideas

Ronald Coase is one of my favourite living economists (he is now 100 years old). His work on the significance of transactions costs and dealing with problems that these costs raise is fundamental to a proper understanding of the market economy and the institutions that support it.  Alas, though his work was recognised with the …

“Public Health” and the New Progressivism

Today's "public health" paternalists bear a striking resemblance to the social-gospel Progressives of yesteryear.

The Times They Are A Changing

President Obama has made a striking 180 degree pivot in the weeks since the 2010 midterm. We all recall the extension of the Bush tax cuts. Many interpreted this as a pragmatic decision given that it was tied to an extension of unemployment benefits. But in recent weeks, several decisions seem to mark a potential …

Taxation, Regulation, and Migration

At the NY Times' Economix blog, Ed Glaeser takes up explanations for the relative population growth enjoyed by Texas, Florida, Georgia, Arizona, and Nevada, compared to relative decline in New York, Massachusetts, and Connecticut. If we ignore international migration, which tends to increase the population of Mexican border states especially, and natural increase, then the …

The Politics and Policy of Health Care in the Age of PPACA

Avik Roy has an interesting piece in National Review on how conservatives (really, free-marketeers) should approach the policy and politics of health care in the age of PPACA. I largely agree with his policy prescriptions, somewhat vaguely stated as they are: First, Republicans must foster a truly free market for health insurance by eliminating the …

Just Another Example of How Personal Freedom Requires Economic Freedom

Police are using regulatory inspections as a pretext for warrantless, apparently racially biased searches. If you're going to support occupational and business licensing, you're going to have to accept a hobbled Fourth Amendment.

The Carbon Tax and Fiscal Responsibility

I was ever so briefly at a conference on pricing carbon this weekend at Wesleyan (I was a moderator for a session). The panelists were committed to the same goal (reduced CO2 emissions) so the discussion focused on the issue of regulatory design and policy instruments. Of the competing approaches—cap-and-trade, cap-and-dividend, and a straight carbon …

TARP: Too Early to Spin a Victory?

The Treasury has been spinning TARP as a victory in the months leading up to midterm elections. I have a lot of respect for Elizabeth Warren (former Chair of the Congressional Oversight Panel for TARP, currently helping in the early work for the Consumer Finance Protection Agency she promoted) and the work she has done on …

Health Care Reform in a Dynamic Environment: Any Surprises?

The health care reforms were designed to expand coverage and “bend the cost curve.” Did no one suspect that insurers would muster a proactive response to changes in policy? In Connecticut: “Health insurers are asking for immediate rate hikes of more than 20 percent in Connecticut for some plans, citing rising medical costs and federal …

County Sues Farmer Over Too Many Crops

Another bizarre case of town government versus the property owner. DEKALB COUNTY, Ga. -- DeKalb County is suing a local farmer for growing too many vegetables, but he said he will fight the charges in the ongoing battle neighbors call “Cabbagegate.” Fig trees, broccoli and cabbages are among the many greens that line the soil …

In Which the Town Comes for My Garden

A Town of Tonawanda building inspector wants to destroy my native plant garden through misapplication of town weed laws. But my garden is legal, and I can prove it...

When Reform Isn’t Reform

In the months leading up to the passage of the financial reform legislation, Congress decided to segregate the issues of financial regulation and the government sponsored enterprises (GSEs) that were central to the collapse. Now that Dodd-Frank is in the bank, Congress and the White House are turning to Freddie and Fannie, the two GSEs that …

From Political Exchange to State Vampirism: The GSEs

Freddie and Fannie are in the news again. Freddie is currently seeking an additional $1.8 billion in funding (to be added to the $160 billion that has already been spent on the two government sponsored enterprises or GSEs). This recent news has led me to pose an account of how a standard political choice story …

Cap-and-trade: Will the dead rise again?

Senate Majority Leader Reid has declared cap-and-trade dead (for now). As the Christian Science Monitor notes: In a bid to win Republican support, Democrats will drop proposed controls on greenhouse gas emissions in favor of more limited measures that have attracted bipartisan support in the past. These include: lifting the liability cap to hold BP …

Is Net Neutrality Racist?

Is Network Neutrality a racist policy?  At least one prominent Chicago politician seems to think so. Cook County Commissioner Robert Steele recently voiced his objections to the FCC’s proposed regulatory attempts to achieve Net Neutrality. The principle of network neutrality asserts that broadband providers should not be able to block or limit use of their …