Transcript Critiques of Regulatory Policy Are We Better Off?   What has improved over the past 50 years?  Pollution?  Health?  Racism?  Do more.

Critiques of Regulatory Policy
Are We Better Off?
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What has improved over the past 50 years?
 Pollution?
 Health?
 Racism?
 Do more people have more stuff?
 What does it mean to be poor in the US over the past
50 years?
What has gotten worse?
 Income disparities?
 Role of expectations?
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Regulatory Successes
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Food and drugs
Environmental regulation
 Through the 1980s
Workplace safety
Civil rights
Banking
 Sort of - lots of moral hazard problems
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Regulations that Did Not Work so Well
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Airline rates and routes
Medical care?
Trucking rates and routes
Telecommunications
Who wins and who loses in economic regulations?
 Small towns and rural areas?
 Unions?
 Big business?
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Why Doesn't the Public Trust Agencies?
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What are examples of public distrust of agencies?
Are these justified?
What is the impact of this distrust?
Why don't people want to pay taxes?
How do the politics shift for national security?
What does Ron Paul say?
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How Do We Make Political Choices?
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Response to a crisis
 Can work for specific narrow issues
 Tends to not consider unintended
consequences
Driven by lobbyists
 Works best when it is not publically vetted
 Think tax code
Cost-Benefit decisionmaking
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Cost Benefit Analysis
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How much should we spend to save a life?
 Why does Congress refuse to put a price on
human life?
 Why does this make CBA more difficult?
How much to prevent injury?
How much should personal responsibility matter?
 personal protective gear?
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CBA Costs - Tables from Saving Lives: A
Review of the Record
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What is the problem with lives saved analysis?
Are they the same lives for different risks?
What about disability?
What are the most cost effective regulations?
 Interesting that vaccinations and clean drinking
water are not here
What are the most costly regulations?
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Could We Spend the Money More Wisely?
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What type of risks do we spend the most on with the least
return?
 Asbestos abatement of stable asbestos in buildings
 Superfund risks
 Overstated health risks - LA cancer corridor
What risks get the least attention?
 Smoking?
 Immunizations?
 Primary care?
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What is the Cost of Unemployment?
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Economic costs to the individual
 Lost opportunities for your children
 Loss of assets, making recovery harder
Health costs
 Stress
 Reduced access to care
Self-esteem
Crime
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Should we do CBA at All?
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Why not prevent all possible risks?
 Precautionary principle
What are the trade offs?
How does the US concern with risks affect our cost of
business production?
When can preventing one risk cause another?
 Natural pesticides
 Smaller, lighter cars
 More expensive power?
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Where does the Court Stand on Requiring
CBA?
The OSHA Cases
The OSHA Statute
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"The Secretary, in promulgating standards dealing with toxic
materials or harmful physical agents under this subsection, shall
set the standard which most adequately assures, to the extent
feasible, on the basis of the best available evidence, that no
employee will suffer material impairment of health or functional
capacity even if such employee has regular exposure to the hazard
dealt with by such standard for the period of his working life.
Development of standards under this subsection shall be based
upon research, demonstrations, experiments, and such other
information as may be appropriate. In addition to the attainment of
the highest degree of health and safety protection for the
employee, other considerations shall be the latest available
scientific data in the field, the feasibility of the standards, and
experience gained under this and other health and safety laws."
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AFL-CIO v. API, 448 U.S. 607 (1980)
The Benzene Case
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Wherever the toxic material to be regulated is a carcinogen, the
Secretary has taken the position that no safe exposure level can be
determined and that § 6 (b)(5) requires him to set an exposure limit
at the lowest technologically feasible level that will not impair the
viability of the industries regulated. In this case, after having
determined that there is a causal connection between benzene and
leukemia (a cancer of the white blood cells), the Secretary set an
exposure limit on airborne concentrations of benzene of one part
benzene per million parts of air (1 ppm), regulated dermal and eye
contact with solutions containing benzene, and imposed complex
monitoring and medical testing requirements on employers whose
workplaces contain 0.5 ppm or more of benzene. 29 CFR §§
1910.1028 (c), (e) (1979).
What did the API say was wrong with the proposed regulation?
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American Textile Mfrs. Institute v. Donovan, 452
U.S. 490 (1981) - Cotton Dust
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How does this standard differ from the Benzene
Case?
 Was there a determination about the economic
impact of the regulation?
While this was a CBA, what did industry say was
wrong with the analysis?
 How did the court distinguish this from the
Benzene Case?
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Stopped here
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Regulatory Dilemmas
FDA
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What are the tradeoffs in FDA regulation?
 Safety/Effectiveness
 Should cost be part of the equation?
Why are consumers in a poor position to judge drugs?
 Background Information?
 Timeframe of action?
 Comparison with other drugs?
What is drug lag?
 Why not let the market sort it out?
 What is the market mechanism - think Vioxx
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Non-Agency Regulation: Tort and
Compensation Law
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How is tort law a regulatory process?
Is it a democratic process?
 What is the public input?
 Who protects the public's interest in tort cases?
What are the standards for scientific decisionmaking?
 Breast implants?
 Erin Brockovich?
What are the standards for CBA?
What if later evidence shows that the verdict or
settlement was wrong?
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Economic Incentives and Taxes for
Environmental Risks
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Tradeable permits for a fixed amount of pollution
 Looks at total pollution or greenhouse gas, not
process of control
 Lets industry see who can do it the most efficiently
What if you are downwind?
 Does an aggregate reduction, which benefits more
people, make you any happier?
Carbon Tax
 Goes to the heart of the CO2 program
 What are the downsides?
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CBA - Federal Flood Insurance
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Should the feds provide flood insurance?
Why does it not work in the private market?
Why are the political pressures on the feds?
 Do local communities really want accurate flood
maps?
 Do people really want accurate storm probability
predictions?
 Are the feds really going to charge accurate
premiums?
What are the perverse incentives of the program?
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CBA: Should We Rebuild New Orleans?
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Would NO be in better or worse funding position if
they had properly evacuated the folks before
Katrina?
What is the CBA for real evacuations?
What is the CBA for rebuilding?
 What are the trade-offs?
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Who Should Pay?
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Should folks in low risk areas subsidize the Big Easy
lifestyle?
How about rebuilding rich folks houses on the
Mississippi coast?
What about the responsibilities of the homeowners?
Should we bail them out when they do not buy
insurance?
 What message did Road Home send to people who did
buy flood insurance?
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What about coastal erosion and
subsidence?
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Should we rebuild homes before it is safe?
If we do not rebuild, what happens to the CBA?
Is coastal restoration justified by the CBA?
 What does the CBA look like if it only slightly
delays the loss of the coast?
How do you figure in the patronage value?
 Would LSU Med be in NO if you did not include
the patronage value?
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