Newspaper article The Christian Science Monitor

Why All the 'Heat' over Regulatory Reform?

Newspaper article The Christian Science Monitor

Why All the 'Heat' over Regulatory Reform?

Article excerpt

SOMETIMES it becomes necessary to remind our fellow Americans that economists breathe the same air and drink the same water as real people. Sadly, that course of action now seems necessary as the debate over regulatory reform heats up, and "heat" is the correct term to use in describing recent events.

A bit of explanation is necessary for understanding why the work of staid academic economists is getting caught in a bitter political crossfire. The place to begin is the phenomenon that started it all, the rapidly growing array of regulation administered by government in the United States. As would be expected, those subject to regulation believe there is too much of it, while the proponents of regulation believe that, at least in this case, more is better than less.

In these circumstances, economists responded in what we considered to be a fairly neutral manner. Yes, we had the temerity to suggest that regulators be required to weigh the advantages and disadvantages before they issue a new regulation. Thus, efficiently crafted rules - those whose benefits exceed their costs - would get a green light. Those other regulations - whose costs are greater than their benefits - would be sent back for redrafting.

A certain amount of criticism of this approach is to be expected; it may even be inevitable. Advocates of bigger government naturally resent a methodology which questions their good intentions by suggesting that some of the proposed expansions of the public sector might not be worth doing. Likewise, some libertarians are extremely suspicious of an analytical approach that could give a go-ahead to some proposed expansion of governmental power. The economist's response is that benefit-cost analysis is, at least in principle, an unbiased method of appraising proposed federal activities.

Moreover, by executive order, benefit-cost analysis has been promulgated by every recent president from Gerald Ford to Bill Clinton.

But these philosophical considerations carry little weight with those who oppose the legislation now being considered by Congress to reform the regulatory process. …

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