A good journalistic piece in The New York Times: “The Perverse Effects of Rent Regulation.” (Thanks to R.M. for the link.)
Rent control is a classic case of bad economics and bad ethics. The bad economics is ignorance of unintended consequences — in this case a price control that makes the initial problem worse. The bad ethics is the altruism that motivates both ignoring the economics and using political compulsion — in this case the willingness to help relatively poorer tenants by sacrificing relatively richer landlords.
Here is Walter Block’s fine discussion of the economics and politics of rent control at the Concise Encyclopedia of Economics, and here is my full video lecture on Rent Control, part of my Business Ethics Cases series.
Posted 7 months, 1 week ago at 9:40 am. Add a comment
Following up on my post entitled “When was the financial sector deregulated?”
Another crude measure of regulation or deregulation is to count the number of pages in the U.S. Federal Register. The Federal Register is the government’s daily publication of new and proposed rules. Some of the rules are trivial and some have large impact; some are proposed and some are final; some are clarifications and some are new. But cumulatively the Register’s increasing or decreasing bulk tells us something about regulatory trends.
For the last generation, here are the Federal Register’s total page counts for selected years:
1980s: 52,992 pages per year average.
1990s: 62,237 pages per year average.
2005: 73,870 pages.
2010: 81,405 pages.
(Side note: This year alone, the Register has published about 590 items related to the Dodd-Frank Wall Street Reform and Consumer Protection Act.)
Question: Does anyone know of a Register page count by economic sector? For example, have number of pages devoted to regulating the Finance and Banking sector increased or decreased over that time?
Of course, page-measurement is a very crude indicator. It doesn’t tell us whether particular rules were good or bad, and it doesn’t tell us whether the overall effect of the rules was positive or negative. So we also have to discuss at least two other follow-up pro-regulation arguments:
1. “Magic Bullet” explanations of the financial crisis: Yes, government regulation increased overall–but if only government regulators hadn’t altered Regulation #355,017, the financial crisis would have been avoided. Or: If only the regulators had also enacted Regulation #4,854,229, the crisis wouldn’t have happened.
2. “Relative-Size Inadequacy” arguments: Yes, regulation increased, but the size of the financial sector increased at a higher rate, so under-regulation was the cause of the crisis.
And the deeper, underlying pro-regulation argument that:
3. Left to themselves, financial markets are predatory and incapable of self-regulation, so top-down government regulation is necessary.
Clyde Wayne Crews. Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State. Cato Institute, 2002.
Clyde Wayne Crews, Jr. Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State. Competitive Enterprise Institute, 2006.
The 2010 page count: Politifact Virginia.
Federal Register: The Daily Journal of the United States Government.
Related: My essay, “Defending Shylock: Productive Work in Financial Markets.”
What is the US economy? Introduction.
Posted 2 years, 3 months ago at 10:30 am. 2 comments
One popular meme is that the financial crisis was caused by deregulation in the banking and financial sectors. Accordingly, suggest the memists, free markets should take the blame and more government regulation is the solution.
When did this deregulation take place? One measure of the degree of regulation is how much the federal government spends to craft and enforce regulations in various sectors: consumer safety, environment, energy, homeland security, and so on. The more the government is regulating, the higher its budget should be; and the less government is regulating, the lower its budget.
Here are the federal government’s budgeted spending numbers for the Finance and Banking sector of the economy (in constant 2000 dollars) from 1960 to 2009:
1960: $190 million
1970: $356 million
1980: $725 million
1990: $1.598 billion
2000: $1.965 billion
2007: $2.065 billion
2008: $2.294 billion
2009: $2.343 billion
Another measure is the number of government personnel employed in crafting and enforcing regulations. The numbers for Finance and Banking:
Other measures of degree of regulation? Conclusions?
Source: Veronique de Rugy and Melinda Warren, “Regulatory Agency Spending Reaches New Height: An Analysis of the U.S. Budget for Fiscal Years 2008 and 2009″ [pdf].
Related: Deregulation? The Federal Register’s size.
What is the US economy? Introduction.
Posted 2 years, 3 months ago at 4:52 pm. 26 comments