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The Questionable History of Regulatory Reform Since the Administrative Procedure Act

March 18, 2015 Comments off

The Questionable History of Regulatory Reform Since the APA
Source: Mercatus Center (George Mason University)

The 114th Congress will likely consider many regulatory reform bills. Understanding how such bills pass is important for effective policymaking. While compromise is often key to legislative success, some kinds of compromise may undermine the future success of the intended regulatory reform. If the history of regulatory reform is any indication, the success of future reform will hinge on whether reform bills maintain the substantive intent of their sponsors or are watered down until they fulfill a merely symbolic purpose.

A new study for the Mercatus Center at George Mason University examines the legislative histories and implementation of key regulatory reform statutes and finds that these bills passed after crucial but controversial provisions were weakened. Compromises included in the legislation to secure its passage have consistently undermined substantive reform objectives by maintaining broad agency discretion to interpret the law and by minimizing judicial review. To achieve regulatory reform objectives, legislators must be careful not to abandon core reform elements or history will continue to repeat itself.

Taxicab Cartels Restrict Entry into Market at the Expense of Consumers

March 8, 2015 Comments off

Taxicab Cartels Restrict Entry into Market at the Expense of Consumers
Source: Mercatus Center (George Mason University)

As the debate continues about how sharing economy service providers such as Uber, Lyft, and Sidecar should be regulated, this week’s chart shows why this is such a hotly contested issue. In New York City, taxi cabs can legally operate only if they have a taxicab medallion. The inflation-adjusted prices for NYC taxicab medallions rose 133 percent, on average, from 2007 to 2013, with prices for both corporate medallions and individual medallions increasing.

Despite the fact that the population of New York City grew roughly 12 percent over the last 70 years, the number of taxicab licenses has actually decreased since 1937, when the Haas Act, which regulated taxis, limited the number of cab licenses in New York City to 16,900. In 2004 only 12,187 medallion cabs operated in the city. Unsurprisingly, the price of medallions has increased dramatically since then. Indeed, over the last 80 years, taxi medallions have generated an annualized 15.5 percent rate of return. Put another way, the value of a medallion doubled, on average, every four and a half years.

These are staggering returns for this particular type of rent-seeking.

The bulk of this windfall goes to the medallion owners and is used to pay the up-front costs of procuring new licenses. Under such a system, current operators gain little from increasing total production; in fact, they gain by lowering it. Limiting the supply of medallions allows the taxi cartel to maintain high fares by preventing entrepreneurs from entering the market.

Nondiscrimination on the Basis of Disability by Public Accommodations-Movie Theaters; Movie Captioning and Audio Description

March 3, 2015 Comments off

Nondiscrimination on the Basis of Disability by Public Accommodations-Movie Theaters; Movie Captioning and Audio Description
Source: Mercatus Center (George Mason University)

With this Notice of Proposed Rule Making (NPRM) the DOJ proposes amendments to Title III of the ADA concerning captioning and audio description services at movie theaters.1 Title III of the ADA applies to places of “public accommodation,” such as movie theaters, restaurants, schools, and doctors’ offices.2 These covered entities are prohibited from discriminating against any individual “on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation.”3

In particular, Title III of the ADA prohibits public accommodations, such as movie theaters, from affording unequal or lesser service to individuals with disabilities.4 As a result, these entities must “ensure that no individual with a disability is excluded, denied services, segregated or otherwise treated differently . . . because of the absence of auxiliary aids and services.”5

The Problems with Measuring and Using Happiness for Policy Purposes

January 20, 2015 Comments off

The Problems with Measuring and Using Happiness for Policy Purposes
Source: Mercatus Center (George Mason University)

The use of happiness as a measurement tool is a new interest among some policymakers. Many governments around the world are considering measures of happiness (sometimes called “subjective well-being”) as alternatives to gross domestic product (GDP) for the purpose of guiding economic policymaking. Proponents of happiness measures correctly point out that GDP does not capture many aspects of economic growth, such as nonmarket activity and certain dimensions of citizens’ and residents’ quality of life. Thus, proponents claim happiness measures may better capture the quality of life of a nation’s citizens and lead to policies that are more effective and equitable.

There are important reasons why using happiness to guide policymaking cannot work as promised. The term happiness covers many different concepts and means something different to different people. Indeed, what constitutes happiness is difficult for most people to put into words. It is even more difficult for researchers and policymakers to define and measure happiness in a way that generates meaningful data that can be used to guide policy. Moreover, implementing policy choices based on happiness data would lead to undesirable or contradictory outcomes that would exacerbate existing societal problems.

An Introduction to Monetary Policy Rules

January 19, 2015 Comments off

An Introduction to Monetary Policy Rules
Source: Mercatus Center (George Mason University)

As policymakers seek to prevent another financial crisis, they are scrutinizing the role the Federal Reserve (Fed) played before and during the 2008 crisis. The Fed currently exercises a great deal of discretion in monetary policy. A key point of debate is whether requiring the Fed to follow a specific rule would be preferable to the Fed’s current broad discretion.

In a new study for the Mercatus Center at George Mason University, scholar Alexander William Salter examines several different proposed rules that the Fed could follow. Salter provides a framework to help policymakers better understand how incentives and information can affect monetary policy and discusses discretion-based and rule-based approaches to monetary policy. He concludes that a rule-based approach is superior and may have been able to prevent the 2008–2009 financial crisis. While Salter does not advocate a particular rule in his study, he presents a framework for policymakers to use as they strive to choose the best monetary policy rule.

The Internet of Things and Wearable Technology: Addressing Privacy and Security Concerns without Derailing Innovation

December 9, 2014 Comments off

The Internet of Things and Wearable Technology: Addressing Privacy and Security Concerns without Derailing Innovation
Source: Mercatus Center (George Mason University)

The “Internet of Things”—smart devices that are connected to both the Internet and other devices—and wearable technology promise to usher in the next great wave of Internet-enabled services and data-driven innovation. The Internet will be “baked in” to almost everything that consumers own. Some critics are worried about the privacy and security implications of the Internet of Things and wearable technology, so they are proposing regulation.

In a new study for the Mercatus Center at George Mason University, scholar Adam Thierer shows that preemptive, top-down regulation would derail the many life-enriching innovations that could come from these new technologies. The study argues that permissionless innovation, which allows new technology to flourish and develop in a relatively unabated fashion, is the superior approach to the Internet of Things. Combining public education, oversight, industry best practices, and transparency in a balanced, layered approach will be the proper way to address concerns about the Internet of Things—not prospective regulation based on hypothetical scenarios.

Curbing the Surge in Year-End Federal Government Spending: Reforming “Use It or Lose It” Rules

October 10, 2014 Comments off

Curbing the Surge in Year-End Federal Government Spending: Reforming “Use It or Lose It” Rules (PDF)
Source: Mercatus Center (George Mason University)

The “use it or lose it” phenomenon refers to the propensity of US government agencies to spend unused financial resources toward the end of the fiscal year out of fear that leftover resources will be returned to the Department of the Treasury, and will prompt future congressional budget cuts for the agency. While anecdotes and media stories of year – end spending surges are widespread , empirical support for year – end spending surges or the motivation behind them is significantly less available. T he budget and spending literature has examined the efficacy of policy solutions designed to curb year – end spending surges, but these studies have often been done without empirical evidence. In this paper, we examine existing literature on the prevalence, consequences, wastefulness, and causes of year – end spending surges. We then report executive departments’ year – end obligated federal contract expenditure patterns using data obtained from USASpending.gov. We review literature on purported solutions to curb year – end spending surges, and conclude with a policy recommendation of our own.

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