The Agenda

Judis on Obama’s Regulatory Revolution

John B. Judis hasn’t shied away from criticizing the Obama administration’s political missteps, but in his article on “The Quiet Revolution,” he suggests that its efforts to strengthen federal regulatory agencies represent a significant accomplishment.

I tend to think that the federal government should generally exercise great restraint when it comes to regulating the private sector, with the special exception of the financial sector. And I take a very different view of some of the controversies Judis raises. That said, he does raise a number of interesting points.

(1) First, he suggests that Republican administrations have tended to underfund regulatory agencies.

Republican presidents didn’t just undermine scientific administration by making poor appointments; they also slashed or held down the regulatory agencies’ budgets, forcing them to cut personnel. This was a particular problem in the all-important area of enforcement: If regulatory agencies can’t conduct inspections and enforce rules, it doesn’t matter how tough those rules are. OSHA’s budget fell 13.1 percent in constant dollars during the Reagan years and 6.8 percent during the administration of George W. Bush. As a result, an agency that had employed 2,950 people in 1980 employed just 2,089 in 2008–and the number of compliance officers had declined 35 percent. According to Michael Silverstein of the University of Washington School of Public Health, this meant that a workplace could expect an inspection only once every 88 year

This reminds me of one of Mark Kleiman’s central arguments in the provocative When Brute Force Fails: when it comes to effective punishment, swiftness and certainty are very effective substitutes for severity. So if I know that I’ll have to go to jail for two nights every time I do a hit of meth, I’m far less likely to do a hit of meth than if I will go to jail for a year once every 100,000 times I do a hit of meth. Those odds aren’t so bad.

In a similar vein, one could argue that instead of sharply increasing the staff at the regulatory agencies, we should more effectively deploy existing staff by scaling back some regulations and tightening the enforcement of those that remain on the books.

One problem we’re facing in scaling up our nuclear power sector is the fact that the US Nuclear Regulatory Commission is very overstretched — they don’t have the resources they need to quickly evaluate new designs, etc. This is a bottleneck on growth. So to some extent, we can work together on this issue.

(2) Judis goes on to suggest that the right misused the idea of cost-benefit analysis, or offered an excessively narrow and tendentious view of it.

The conservative version of cost-benefit analysis stressed costs rather than benefits and subjected only regulation–not deregulation–to cost-benefit scrutiny. Conservatives also sometimes adopted bizarre formulas for assessing costs and benefits. They assigned less monetary value to improvements or protections in poor communities because the residents were willing (that is, able) to pay less for them, and they used a spurious correlation between a society’s wealth and the health of its citizens to argue that the costs of regulation outweighed the benefits. Under George H.W. Bush, for example, OIRA argued that OSHA regulations on chemical contaminants would end up harming workers more than exposure to chemicals. Wrote James McRae, the acting head of OIRA, “If government regulations force firms out of business or into overseas production, employment of American workers will be reduced, making workers less healthy by reducing their income.”

I’m actually not so sure that the connection between a society’s wealth and the health of its citizens is entirely spurious. My guess is that McRae could offer a fairly persuasive defense of his stated view. That said, Judis makes a reasonable point when he suggests that the question of how we weight different impacts is ultimately a value question and not a technical question, and it is possible that Republican administration didn’t settle on the right balance.

I tend to think that long-term joblessness is so severe a problem — the social costs are so extremely high — that we ought to weight the reduction of employment opportunities very, very heavily.

Reihan Salam is president of the Manhattan Institute and a contributing editor of National Review.

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