Economists are not anti-regulation, but they are skeptical of rules and mandates that don’t pass a cost-benefit test.
Politicians, meanwhile, generally don’t care about regulation. They are not impervious to evidence and analysis, but they mostly want to maximize votes, power, and money. If they can achieve those goals by deregulating (as happened during the Carter, Reagan, and Clinton years), we get better policy.
But if politicians think it is in their self interest to impose more red tape, that is likely to happen.
Sadly, it will even happen when cost-benefit analysis shows that more regulation will backfire because of tradeoffs and unintended consequences.
Consider what is now happening with regulation of the railroads.
Eric Boehm recently wrote about this topic for Reason. Here are some excerpts.
…in May 2019, the Department of Transportation withdrew a proposed regulation that would have required all freight trains in the United States to operate with two-person crews. …After three years of investigating the issue, the FRA reported that accident data did not show two-person crews to be any safer than one-person crews. The National Transportation Safety Board (NTSB) agreed, telling the FRA that “There is insufficient data to demonstrate that accidents are avoided by having a second qualified person in the cab.” Then, in February, a train derailed in East Palestine, Ohio. It spilled vinyl chloride… Ohio Sens. Sherrod Brown, a Democrat, and J.D. Vance, a Republican, have rushed forward with the Railway Safety Act, a bill that would impose the two-person crew requirement that the FRA considered and rejected in 2019. The rule still has nothing to do with safety. Indeed, the train that derailed in East Palestine had a crew of three aboard. …As such, it is a useful illustration of how right-wing populists like Vance are actually advancing long-running goals of the political left… That includes Trump, of course. Even though it was his administration that killed the two-man-crew mandate in 2019, the former president is now a strong supporter of the bill that would impose the same mandate.
I’m guessing that Trump doesn’t realize that he’s flip-flopping on the issue. And he probably wouldn’t care if he did know.
J.D. Vance, however, probably is aware that he’s pushing bad policy. But he presumably thinks the potential political benefits for himself matter more than the economic harm to the country.
The two-man-crew mandate is just the start. The Railway Safety Act also grants broad new powers to Transportation Secretary Pete Buttigieg, who would be responsible for creating a new regulatory regime to govern trackside sensors and the power to write new regulations for railcars and their routine inspections. Regulations that make it more difficult or expensive to ship goods by rail will actually undercut safety by pushing more hazardous materials onto roadways… Legislation that exclusively piles new regulations onto rail will trigger “higher rail shipping costs and more goods traveling by truck, which would be a decidedly inferior outcome for society,”… In supporting the Railway Safety Act, Vance and Trump are signaling support for a litany of left-wing goals: growing the regulatory state, giving bureaucrats more power over American businesses, and protectionism for union jobs. They’re also falling into the same trap as many progressives: ignoring trade-offs and obvious unintended consequences.
Sadly, enactment of dirigiste policy is very typical when politicians only care about headlines and ignore cost-benefit analysis. Anti-vaping rules, economic lockdowns, recycling policy, money laundering laws, and the Food and Drug Administration are all examples of this phenomenon.
The bottom line is that Sen. Vance and Pres. Trump are wrong. The correct answer is free enterprise, not more power for politicians and bureaucrats.
P.S. Cost-benefit analysis puts a lot of people to sleep, but Remy managed to make the topic very amusing in this video.
