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Home Publications Blogs Beat the Press David Brooks Teaches People How Not to Talk About Regulation

David Brooks Teaches People How Not to Talk About Regulation

Tuesday, 06 December 2011 05:18

Some people try to teach by providing step by step instructions. This can be very tedious. David Brooks instead teaches by example. In his column today, David Brooks commits two of the great sins that would not appear in any serious discussion of regulation. 

First he discusses the cost of the regulations put in place by different presidents:

"George W. Bush issued regulations over eight years that cost about $60 billion. During its first two years, the Obama regulations cost between $8 billion and $16.5 billion, according to estimates by the administration itself, and $40 billion, according to data collected, more broadly, by the Heritage Foundation."

So regulation under the last president Bush cost $60 billion. Is this $60 billion a year (@0.4 percent of GDP)? Is it the accumulated cost over ten years (@0.04 percent of GDP)? Or, is it over a one-time cost of $60 billion? David Brooks doesn't tell us. The differences are of course enormous, but we have not a clue based on the information given in the article.

The second major sin is that we have no idea how Brooks is measuring costs. Suppose that my neighbor has the disturbing habit of dumping his sewage on my lawn. If this is a common problem, then I and others similarly afflicted may unite to put a socialist in the White House who will prohibit people from dumping sewage on their neighbors' lawn.

Most regulation does in fact have this character. It prohibits businesses from doing harm to the life and property of others. The question is, does Brooks' measure of the cost of regulation simply count the cost to my neighbor of dealing with his own sewage, or is it supposed to be some net measure that subtracts the savings that accrue to me and other current recipients of our neighbors' sewage?

Brooks doesn't tell us, but since analyses of most regulations show the benefits far exceed the cost (in the case of the Clean Air Act, the net benefits were estimated as $2 trillion over the next few decades), it is likely that Brooks is simply counting the cost to my neighbor of cleaning up his own sewage. It's not clear what this tells us exactly about the burden of regulation, but hey, this is David Brooks, what did you expect?

Comments (8)Add Comment
written by RZ, December 06, 2011 5:27
C'mon, let the man regurgitate press releases. No one else in the 1% is expected to think.
Brooks is First Best Because He Knows Second Best, Low-rated comment [Show]
written by Pat, December 06, 2011 6:23
Wouldn't that mean I would be paying Brooks for something he shouldn't be doing in the first place? Only a stupid liberal would do that. Smart liberals regulate and impose fines on bad behavior.

Which answers some of the questions as to why we find America in such a sorry and filthy state of affairs that its in today.
written by Mark Jamison, December 06, 2011 6:35
Brooks is also disingenuous in not revealing the types of regulations. Many of the regulations promulgated in recent years relate to the financial crisis and financial community. The "costs" of these regulations might appear quite high given they are regulating huge amounts of capital.
Status as moderate restored!
written by Kat, December 06, 2011 7:48
Not too may comments yet, but predictably the few there have fallen for the bait. In doing so, they have accepted Mr. Brooks characterization of regulations as "intrusive". And, they have accepted the dollar amount of costs of regulations (courtesy the Heritage Foundation). Don't they realize at this point that Brooks is always trouble when he pulls out the big numbers.
Red Herring
written by Ron Alley, December 06, 2011 8:03

The broadly accepted notion of the "cost of regulation" is not helpful to understanding issue of the benefits and burdens of any regulation. The real issue is does the cost of regulating an activity exceed the costs of not regulating that same activity. Take compulsory automobile insurance for example.

The cost of requiring automobile uninsured owners to buy auto coverage can readily be compared to the costs suffered by others (drivers, passengers, pedestrians, hospitals, health insurers, etc.) who are injured by uninsured automobiles. There is no cost-benefit tradeoff. There is merely the cost of regulation compared to cost of failing to regulate.

Another example is the cost of regulating drug innovation with patents. The costs of doing so is evident in the premium paid for patented drugs. The costs of not applying patents to drugs is somewhat more difficult to compute.

The conventional cost analysis of regulation favored by the Republicans is really better suited to comparing the costs of different regulatory schemes. Would a system of direct drug research subsidy cost more than a system of patents and retail price controls?

Regulatory arbitrage
written by Steve williams, December 06, 2011 9:31
The current Chinese monopoly on the very dirty process of rare earth refining coupled with Chinese threats to embargo exports or to use all production for Chinese manufacturing complicates the 'benefits and burdens' analysis of regulation
most regulations are simply capture
written by pete, December 06, 2011 10:43
Of course they are inherently costly, as they are used typically to create monopoly power. Regulation starts with a well intentioned idea, like "safety" and then the affected industry will figure out a way to use the regs to eliminate small competitors and such, with such tricks as making sure there are high fixed costs for compliance which the big firms can pass on with price increases but which drive the little guys to bust.

I'm from the government and I am here to help....

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.