Critiques of Regulatory Policy

2 Regulatory Analysis What is CBA? Why is CBA sometimes very controversial, especially for environmental regulations? What is the value of regulatory analysis? What is PBA? (political benefit analysis) Why does it always trump CBA?

3 Cost Benefit Analysis 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?

4 Cost-benefit and Risk-benefit analysis Justice Breyer's tunnel vision problem Each rule is seen without reference to all the other regulations Thus each new safety rule may be cost effective, but the aggregate is not Disaster Decision Making This is always an issue after a disaster when politicians want to show they are doing something. Paralyzed thinking after Katrina

5 Environmental Cleanup Example Why is this a problem in environmental law? The cost of removing the last 5% of crap What about asbestos and brown fields?

6 Where does CBA fail? Do the costs and benefits always fall on the same group? Why does HHS and the state continue to favor high tech medicine over primary care? What is the CBA? What is the disconnect between the costs and the benefits? How does the diffuse and long term nature of benefits complicate CBA? Should we use CBA at all for health regulations?

7 Regulatory Successes Food and drug safety - compared to 1900 Environmental regulation Through the 1980s Workplace safety Civil rights Banking Lots of moral hazard problems, which blew up in 2008 No one lost insured deposits Lots of folks lost retirement savings that were in the market.

8 Where are We Better Off? 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 100 years? What has gotten worse? Neonatal death rate? Income disparities? Role of expectations? Are things absolutely worse, or worse in comparison with other individuals and countries?

Who wins and who loses in economic regulations? Small towns and rural areas? Small business? Why is small business at greater risk? Do you want to have less regulation for small business? How does the risk they pose differ from big business? Big business? Unions? The Rich? 9

10 How Do We Make Political Choices? 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

11 Why Doesn't the Public Trust Agencies? What are examples of public distrust of agencies? Oysters Are these justified? What is the impact of this distrust? How is this distrust transformed used to justify not being taxed? What about when there is a local problem? How do the politics shift for national security? What does Ron Paul say? What happens to small government views when there is a disaster? Or someone wants a levee, dam, etc.?

12 CBA Costs - Tables from Saving Lives: A Review of the Record 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?

13 Could We Spend the Money More Wisely? What type of risks do we spend the most on with the least return? Asbestos abatement of stable asbestos in buildings Superfund risks Toxic exposures in general Is there an LA cancer corridor? What risks get the least attention? Smoking? Immunizations? Primary care?

14 Should we do CBA at All? 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?

15 Where does the Court Stand on Requiring CBA? The enabling act is controlling In AFL-CIO v. API, 448 U.S. 607 (1980), the court found that OSHA enabling act required CBA on standards for benzene In American Textile Mfrs. Institute v. Donovan, 452 U.S. 490 (1981), the court found that OSHA did not have to do CBA for cotton dust standards because it was not required by the statute directing regulation of cotton dust.

16 Non-Agency Regulation: Tort and Compensation Law 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?

Regulatory Dilemmas

18 FDA 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

19 Economic Incentives and Taxes for Environmental Risks 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?

20 CBA - Federal Flood Insurance 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?

21 CBA: Should We Rebuild New Orleans? 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? Is disaster good business? Who Should Pay? Should folks in low risk areas subsidize the Big Easy lifestyle? How about rebuilding rich folks houses in coastal Mississippi? 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?