“the changes are a significant step backward. Biden is effectively undoing a major change made by the Reagan administration—changes that were made, fittingly, to help combat inflation.
That change, made in 1982, repealed the “30 percent rule” that guided the process for determining what wages would be paid on which projects. Under the 30 percent rule, the prevailing wage for any particular area would be based on the highest wages paid to at least 30 percent of workers within the same area.
You don’t need an advanced degree in accounting to see how that mandate could artificially hike wages on federal projects. The government barred itself from even considering bids that might pay average wages, thereby obligating taxpayers to pay more than they might have had to in an open market.”
“Sunscreen is regulated like a drug, which means the product is subject to byzantine FDA regulations that have largely thwarted innovation in the category for the last 20 years.
As the economist Alex Tabarrok has pointed out, European and Asian countries enjoy vastly superior options.
“Suncreens in Europe and Asia are better than in the United States because more ingredients are allowed and these create more effective and more pleasing suncreens,” he writes.
This is no accident, but rather the deliberate result of regulatory policy. The European Union, for instance, has approved 27 different compounds for use in sunscreen, whereas the FDA has only approved 17.
“The number of approved ingredients matters because not all filters can seamlessly be formulated into sunscreens or other suitable products for skin application,” writes the Cato Institute’s Gabriella Beaumont-Smith. “Moreover, some of the ingredients approved in the EU and Japan but not the US are more effective and long‐lasting.”
If the FDA won’t clear more sunscreen ingredients for use in the U.S., the agency should at the very least allow reciprocity: Foreign sunscreens could be made available with warning labels noting that they were approved by European health officials but not by the FDA. Of course, the best option would be for U.S. regulators to simply get out of the way and acknowledge that these products are obviously safe for human use. Indeed, not approving them is the greater danger, since using sunscreen is one of the best ways to prevent skin cancer.”
“The move to regulate fuel economy came about a few years earlier, following the 1973–74 Arab embargo that suddenly ended the flow of oil from OPEC nations. In the face of skyrocketing oil prices, Congress froze gasoline prices to protect American consumers from pocketbook shock. Then came the hard part. Elected officials sought to require U.S. automakers to build the smaller, more economical cars that unquestionably would have been built had gasoline prices been allowed to rise freely. Yet the fuel economy standards hit passenger sedans hard while leaving light trucks, which were not seen as passenger vehicles, almost untouched.
As the fuel economy standards began to bite consumers, they found that trucks provided comfort and safety no longer available in the downsized sedans. Truck sales surged, and in 1990, Ford placed a four-door body on a Ranger truck frame and introduced the Ford Explorer, a passenger vehicle that satisfied the government’s truck definition. This inspired an explosion of similar SUV production across the industry. Trucks became beautiful, expensive, and highly desirable.”
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“All the while, the fuel economy standard for trucks remained less strict than for sedans. To make things even better for U.S. producers, almost-prohibitive tariffs on European light trucks were extended to the rest of the world. Many foreign producers eventually jumped the tariff wall and built trucks and cars here, but the home-grown industry enjoyed an early advantage.”
“After many years of working in the policy world, I have concluded that politics is at most 10 percent about making the world better and safer. The rest is at least 45 percent theater and 45 percent catering to special interest groups. Further evidence for my assessment comes from the recent grandstanding in the U.S. Senate on rail safety.
One reason why so much of what comes out of Congress is useless, if not straight up destructive, boils down to incentives. Politicians need something they can brag about when they seek reelection or election to higher office. Meanwhile, legislators are constantly surrounded by special interests who plead for government-granted privilege such as subsidies, loan guarantees, tariffs, or regulations cleverly designed to hamstring competitors. Politicians rarely hear from the victims of their policies. Few voters can trace the origin of the higher prices they pay and the lower living standards they suffer.”
“The authors find that “there is a sharp fall in the fraction of innovating firms just to the left of the regulatory threshold,” which they label an “innovation valley” because the regulatory consequences of increased employee size mean that firms choose not to innovate. This fact holds for firms’ responses to demand shocks, as firms “with size just below the regulatory threshold” choose not to increase production to meet this demand because of the regulatory implications.
In total, the authors conclude that labor regulations equate to a 2.5 percent tax on profit, which reduces innovation by about 5.4 percent and “reduces welfare by at least 2.2% in consumption equivalent terms.” This tax on profit continues to affect firms to the right of the threshold, resulting in “a greater flattening of the positive relationship between innovation and firm size.”
The authors examine the effects of labor regulations on firms with between 10 and 100 employees, noting that “many labor regulations apply to firms with 50 or more employees,” and measure the firms’ innovative capacity by the number of patents.
These regulations force firms to devote resources away from production, including spending revenue on worker training, offering union representation, and creating profit-sharing schemes and a works council with employee representation.
“We are not saying all regulations are bad, but rather it is important to go beyond the usual approach to thinking about costs and benefits which are short-term and generally ignore long-run innovation,” Van Reenen tells Reason.”
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“”Firms respond to incentives and disincentives and we find that even when firms experience positive developments, such as a surge in demand, they may still hesitate to invest in research and development and pursue innovation if they are near this size threshold,” Bergeaud explains to Reason. “Indeed successful innovation implies growth, which, in this case, would mean crossing the 50-employee threshold and incurring additional costs.”
Another interesting finding of the study is that firms innovating under substantive regulation tend to “swing for the fence” since “regulation deters incremental R&D” and firms want “to avoid being only slightly to the right of the threshold.” While significant innovations garner media coverage and drastically affect consumer well-being, minor innovations also provide benefits, allowing firms to deal with immediate concerns for less investment.”
“in St. Paul, Minnesota. In 2021, city voters passed a ballot initiative that imposed a 3 percent annual cap on rent increases without exemptions for new construction or allowances for inflation.
The result? Developers fled town en masse, walking away from already in-progress projects and canceling permit applications. The city hurriedly worked to weaken the voter-passed law.”
“It has been more than two years since New York notionally legalized recreational marijuana, and things are not going quite as planned. “Although Gov. Kathy Hochul suggested last fall that more than 100 dispensaries would be operating by this summer,” The New York Times notes, “just 12 have opened since regulators issued the first licenses in November.”
Part of the problem, as you might expect, is red tape and bureaucratic ineptitude. But another barrier to letting licensed marijuana merchants compete with the unauthorized vendors who have conspicuously proliferated since the spring of 2021 is the state’s affirmative action program for victims of pot prohibition.
New York, like several other states that have legalized marijuana, mandated preferences for license applicants who suffered as a result of the crusade against cannabis. While that idea has a pleasing symmetry, it never made much sense as a way of making up for the harm inflicted by cannabis criminalization. And in practice, executing the plan has drastically limited the legal marijuana supply, making it much harder to achieve the state’s avowed goal of displacing the black market.
To be clear: I don’t think people with marijuana convictions should be excluded from participating in the newly legal market, a policy that would add insult to injury. But that does not mean they should have a legal advantage over cannabis entrepreneurs who were never arrested but might be better qualified.”
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“New York reserved the first batch of up to 175 retail licenses mainly for people with marijuana-related criminal records or their relatives. Those applicants needed to show they had experience running a “profitable” legal business in the state. Nonprofit organizations with “a history of serving current or formerly incarcerated individuals” also were eligible, provided they had “at least five full time employees,” “at least one justice involved board member,” and a track record of operating “a social enterprise that had net assets or profit for at least two years.” Another requirement was demonstrating “a significant presence in New York State,” which led to litigation and a temporary injunction against issuing retail licenses in five areas of the state.
Satisfying the state’s criteria required “a lot of documentation,” Bloomberg CityLab reporter Amelia Pollard noted last fall, which gave New York’s Office of Cannabis Management (OCM) “a mound of paperwork to wade through.” As of November, the OCM had received more than 900 applications from would-be marijuana retailers. On November 20, it announced that it had granted 36 “provisional conditional adult-use retail dispensary licenses” to individuals and organizations.”
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“The approved retailers are far outnumbered by unauthorized vendors, many of whom openly sell marijuana from storefronts, trucks, and tables, unencumbered by the state’s licensing requirements, regulations, and taxes. Yelp’s list of the “best recreational marijuana dispensaries” in New York City includes 90 outlets, only a few of which are blessed by the OCM.”
“The most significant policy change—or, perhaps, the least insignificant—is new limits on how long mandatory National Environmental Policy Act (NEPA) reviews can take. The Fiscal Responsibility Act incorporated some changes first proposed by the Trump administration’s Council on Environmental Quality (CEQ) in 2020 to limit NEPA environmental reviews to no more than two years and the resulting environmental impact statements to no more than 150 pages.
That’s a welcome change. As part of the process that originally produced those suggestions, the CEQ found that the average environmental impact study is 661 pages and typically takes more than four years to complete. Time is money, and all those delays are expensive. In its report, the CEQ cited a study, by the nonpartisan reform coalition Common Good, estimating that “the cost of a 6–year delay in starting construction on public projects costs the nation over $3.9 trillion, including the cost of prolonged inefficiencies and avoidable pollution,” as Reason’s Ron Bailey reported at the time.
The environmental impact of major infrastructure projects is important to consider, but NEPA has devolved into a tool often wielded by opponents of development rather than sincere concern for the plight of the sage grouse. Placing limits on how long NEPA can delay a building project makes a lot of sense.
The NEPA tweaks included in the Fiscal Responsibility Act will “slightly improve the process,” says Stapp, “but the biggest problem—judicial review—was left untouched.”
Indeed, the Fiscal Responsibility Act’s limits on NEPA reviews don’t apply to the often-inevitable litigation that spirals out from them. Without that component, the new rules have a giant loophole—one that opponents of new construction will continue using to delay and drive up costs.”