Regulatory State Watch: How Many Trillions Are Wasted?
According to a report from the Chamber of Commerce, regulatory barriers in just one sector of the economy -- energy -- are holding up 351 projects that could produce a $1.1 trillion short-term boost to the economy and create 1.9 million jobs annually. The report, called "Progress Denied" is part of the Chamber's "Project No Project" initiative, designed to shed light on the high price of regulatory overkill. About 45% of the projects are "alternative energy" (wind, solar) projects, which suggests that (i) the nanny state is an equal-opportunity scold; and (ii) some of these projects are probably white-elephant windmill farms, but ... so what? If that's where private investors want to put their money, so be it.
There's a legal/constitutional point here. As our own Richard Epstein has famously written, regulations can be so burdensome as to amount to a "taking" (confiscation) of private property, requiring compensation under the 5th Amendment. And even where property isn't "taken," the regulatory permitting process turns common-law property rights upside down. Under the common law, the courts couldn't enjoin economic activity until some harm was actual or imminent. In the regulatory state, bureaucrats are empowered to look into an imaginary crystal ball and seek out future harms. It's far easier to say "no" rather than say "yes" and risk being second-guessed down the road.
When the stimulus was passed, Democrats put in an amendment to expedite the approval process for the various boondoggle projects. But when private capital is at stake, and there's no politician to take the credit, projects are left to the tender mercies of the career civil service.
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Jul '10
Re: Regulatory State Watch: How Many Trillions Are Wasted?
Adam, here's an example in the news, with an ironic twist: the city of Half Moon Bay, California (population 12,586) is facing a budget calamity due to its attempt to deny a landowner the productive use of his property.
A real-estate developer purchased a 24-acre parcel of land in 1993, with the intent of building housing. Although the land had previously been approved for such use, the city denied the new owner's plan, saying that the parcel had subsequently become coastal wetlands - which, under California coastal regulations, cannot be developed.
The developer sued the city and won a $36.8 million judgment, by proving that it was the city itself that had converted his land to wetlands by botching a storm-water project and by allowing dirt to be hauled away from the site as fill for another, nearby development.
So Half Moon Bay's government, seeking to use California's draconian anti-development regulations in order to deprive a landowner of the use of his property, is hoist on its own petard - with taxpayers left to foot the bill.
Edited on Apr 4, 2011 at 8:27amRe: Regulatory State Watch: How Many Trillions Are Wasted?
Thanks Kenneth, I didn't know about that one, but it is a perfect example. Here's a case in which I agree completely with Judge Vaughn Walker!
Dec '10
Re: Regulatory State Watch: How Many Trillions Are Wasted?
This is evident within the private sector, as well. It is useful to consider the sorts of people that come to specialize in regulatory issues, environmental law, and the environmental sciences. I try to always advocate for the private landowner but have once raised the point, within my own firm that, "You know, there is such a thing as property rights".
The response I got from a fellow, private sector, employee was, "Not neccesarily". Fortunately, that employee was unable to harm my client, but the potential is always there. For instance, within the private sector it is not uncommon for low level employees to leak data that, out of context, can harm clients and/or extend the process of regulatory review.
Oct '10
Re: Regulatory State Watch: How Many Trillions Are Wasted?
This brings to mind an observation by libertarian science fiction author L. Neil Smith, which I have come to call the “eighthfold way”:
The fact is, each of us pays half his income to one government or another, cutting his real wealth in half. Those we purchase goods and services from also pay half to government, except that they don't really pay—we do, through prices twice as high as they should be. Which cuts real wealth in half again, to a quarter of what it would be if everyone kept what they earn. It also costs to comply with idiot regulations. Dixy Lee Ray, in Environmental Overkill, estimated that it amounts of another halving, meaning that the government sucks off seven-eighths; we're left to survive on one eighth of our productive capacity.
Let me say that again, so there'll be no mistaking it; Government consumes seven-eighths of everything we make or do; we're left to survive on one-eighth of our productive capacity.
Is it any wonder so many of us are working so hard and falling farther and farther behind?
Edited on Apr 4, 2011 at 3:03pm