Topic: Regulatory Studies

Goodbye to Locally Processed Meats?

The Atlantic has posted (h/t Future of Capitalism) an article by Virginia artisanal meat provider Joe Cloud sounding the alarm about how as regulation intensifies, only producers with the scale and sophistication to deal with it will be left standing:

Although species go extinct on Earth on a regular basis, every so often there is a major event that comes along and wipes out 40 or 50 percent of them. The same thing happens in the small business world. A few businesses fold every year due to retirement, poor management, and changes in the market, and that is quite normal. But then every so often a catastrophe comes along and causes a wholesale wipeout.

For small meat businesses in America, catastrophic events result from changes high up in the regulatory food chain that make it very difficult for small plants to adapt. The most recent extinction event occurred at the turn of the millennium, when small and very small USDA-inspected slaughter and processing plants were required to adopt the costly Hazard Analysis and Critical Control Point (HACCP) food safety plan. It has been estimated that 20 percent of existing small plants, and perhaps more, went out of business at that time. Now, proposed changes to HACCP for small and very small USDA-inspected plants threaten to take down many of the ones that remain, making healthy, local meats a rare commodity.

I’ve been following this particular controversy for a while, and perhaps its most depressing aspect is how very typical the pattern is. In 2008, following demands that it do something about much-publicized Chinese toy recalls, Congress passed the Consumer Product Safety Improvement Act, which devastated many hundreds of smaller manufacturers, importers and retailers of children’s clothing and playthings while leaving relatively unscathed Mattel, Hasbro, and the biggest discount retailers (all of which had in fact supported passage of the law). More recently, major food and agribusiness firms have signed on to support a major new round of federal food safety regulation despite warnings that it could pose big compliance challenges for many local bakers, fruit-baggers, and other small providers whether or not their products pose any notable risks.

I generally share many of the views of the “locavore” movement regarding the value of distinctive local food cultures and the importance to kids and cooks of getting a more direct sense where food comes from. Trouble is, some of us who imagine ourselves friendly to locavore thinking reflexively support whatever regulatory proposals are billed as most stringent and thus most protective. By the time we realize the choices we have lost, it can be too late.

Regulatory Spending Actually Rose under Bush

Analysts across the ideological spectrum generally agree that the government’s regulatory bodies fail far too frequently. However, analysts seem to learn different lessons from this experience.

Washington Post business columnist Steve Pearlstein cites numerous examples of failure and concludes, “It’s time for the business community to give up its jihad against regulation.”

He says:

It hardly captures the breadth and depth of these regulatory failures to say that during the Bush administration the pendulum swung a bit too far in the direction of deregulation and lax enforcement. What it misses is just how dramatically the regulatory agencies have been shrunken in size, stripped of talent and resources, demoralized by lousy leadership, captured by the industries they were meant to oversee and undermined by political interference and relentless attacks on their competence and purpose.

It’s true that regulators often do the bidding of the industries that they regulate. But “regulatory capture” is a long recognized phenomenon that undermines the contention that the government is well-suited to be a watchdog.

Regardless, is Pearlstein right that federal regulatory agencies were “dramatically” shrunk? Not according to a new study from George Washington University and Washington University in St. Louis. The figure shows that regulatory spending actually rose an inflation-adjusted 31 percent during the Bush administration (FY2002-FY2009):

Similarly, regulatory staff jumped by 42 percent under Bush’s watch:

$288/Month for an Upper East Side Studio

“Rent Control Is a Vanishing New York Treasure,” proclaims the headline over a New York Times story. Like Josh Blackman, I think “treasure” isn’t the right word here: “anachronism”, “disgrace” and “abject policy calamity” are more like it.

P.S. The Times article sympathetically depicts a Gotham tenant who pays the legally dictated rent of $288 to live in one of the nation’s most desirable neighborhoods. You guessed it: he feels put upon in that situation, believes his landlord should be doing much more to spruce up the place, and has teamed up with Manhattan State Sen. Liz Krueger to pursue his fight.

Rand Paul and the ADA

Along with the rest, the Kentucky Senate candidate has come under fire for expressing some guarded criticism of the Americans with Disabilities Act in broadcast interviews. In particular, opponents have blasted Paul for getting some details about the law wrong in his off-the-cuff hypothetical example:

Let’s say you have a local office and you have a two story office and one of your workers is handicapped. Should you not be allowed maybe to offer them an office on the first floor, or should you be forced to put in a hundred thousand dollar elevator?

In fact ADA regulations specify that elevators will not be mandated for private buildings of “less than three stories” unless used for shopping, health care, or some other purposes. This leads Jed Lewison of Daily Kos, with the generosity of spirit toward opponents for which that site is known, to rant: “What an idiot… He has no idea what [the federal government] does. He’s like a toddler freaking out about monsters under the bed.” Right. Doesn’t everyone who gets asked about their position on the ADA on national TV know that the elevator cutoff begins at three stories, not two?

Associated Press reporter John Cook has followed up with a “Newsroom” blog entry pursuing the gotcha theme, and quotes me in the course of doing so. Since I might not have made myself sufficiently clear on the phone with Cook, let me try to have another go at it here.

Does the ADA ever mandate that a business install elevators in its three-story building? Yes, often it does, but typically not through its employment provisions, which, as federal guidance has made clear, seldom if ever require installation of an elevator as the requested “reasonable accommodation” for an individual worker. The other main branch of the ADA relevant here is the law’s architectural rules, which do not hinge on any calculation of reasonable accommodation to individual workers/users. Under these rules, so long as the owner of an older building leaves it alone without restoration, only “readily achievable” changes will be required, which will ordinarily not include elevator installation. Cook quotes spokespeople for the EEOC and DOJ who correctly deny – note the narrow wording, which may escape many readers – that elevators are required under the “reasonable accommodation” standard. And he quotes a court decision – again note the narrow ground – that elevator installation is not required under the “readily achievable” standard.

But where the rules on major improvements like elevators get their teeth – as some of Cook’s sources must surely be aware – is not from either of those standards, but from the rules that apply to new construction and, crucially, renovations of older spaces. Renovation, when not minor, triggers a requirement to bring the space up to broad ADA standards. This can easily result in elevators and other budget-busting outlays for the immediate benefit of perhaps a single employee or perhaps of no employees at all, since the requirements apply whether or not any disabled person has ever sought access to the space.

Next time federal agency spokespeople are asked about elevator mandates, I hope they address the renovation trigger rather than other, less relevant sections of the law. They might even want to check their own website (South Dakota restaurant owner “agreed to install an elevator” following complaint to the feds) or, amusingly, the Daily Kos site itself (contributor: “I was laid off from my job last November because the company I was working for was forced to install an elevator in their new building.”)

As I told Cook, I think it’s pretty common for Senators (let alone non-incumbent candidates) to display confusion about which provision does what in a complicated law. Last year Arkansas Senator Mark Pryor, defending the Consumer Product Safety Improvement Act of 2008 – a law he was himself instrumental in passing – claimed that “the law allows the CPSC to make ‘commonsense exceptions’ to anti-lead requirements.” It doesn’t, but the remark passed almost unnoticed since no gotcha narrative was running at the time.

If candidate Paul is looking for non-hypothetical examples of curious and untoward ADA applications, he might start here and here (restaurants), here (rugged hiking lodge), here (PDF, see p. 7 – resort accessible only on skis), or, on employment topics, here, here, or here. And thanks to Ira Stoll at Future of Capitalism, who cites my writing in responding to another critic of Paul, former Bush speechwriter Michael Gerson, who disputably appears to regard the ADA as among “the largest moral achievements of recent American history.”

Federal Aid: 45 Years of Failure

Yesterday, the Washington Post reviewed the life of Phyllis McClure, who was an advocate for federal education spending in low-income neighborhoods.

Once an aspiring journalist, Ms. McClure joined the NAACP Legal Defense and Education Fund in 1969. She immediately used her penchant for muckraking to illuminate the widespread misuse of federal funds meant to boost educational opportunities for the country’s neediest students.

The money was part of the new Title I program, created under the Elementary and Secondary Education Act of 1965. The slim volume that Ms. McClure wrote in 1969 with Ruby Martin – ‘Title I of ESEA: Is It Helping Poor Children?’ – showed how millions of dollars across the country were being used by school districts to make purchases – such as a Baptist church building in Detroit and 18 portable swimming pools in Memphis – that had little to do with helping impoverished students.

The authors charged that money meant for poor children was being used illegally by school districts as a welcome infusion of extra cash to meet overhead expenses, raise teacher pay and other such general aid. In addition, they wrote, districts were using Title I funds to continue racial segregation by offering black children free food, medical care, shoes and clothes as long as they remained in predominantly black schools.

That all sounds rather familiar–state and local governments misusing federal aid dollars. As I’ve written about at length, there was an explosion in federal aid for the states in the 1960s, with hundreds of new programs established. But huge problems developed almost immediately–excessive bureaucracy and paperwork, one-size-fits-all federal regulations stifling local innovation, and the inability of federal aid to actually solve any local problems. 

I live in Fairfax County, Virginia. The county receives about $15 million a year in federal “Title I” aid for disadvantaged schools–the program Ms. McClure was worried about. But Fairfax is the highest-income county in the nation! Why are hard-working middle-income taxpayers in, say, Ohio, paying for local schools in ultra-wealthy Fairfax?

Aside from the misallocation problem, academic evidence suggests that state and local governments mainly offset federal spending for poor schools by reducing their own spending on poor schools. Poor schools end up being no further ahead.

The federal aid system is crazy. Even if federal aid is a good idea in theory–and it isn’t–the central planners haven’t been able to make it work as they envisioned in more than four decades. The federal aid system has simply been a giant make-work project for the millions of well-paid federal/state/local administrators who handle all the paperwork and regulations.  

Even if federal aid was constitutional or it made any economic sense, it will never work efficiently. Aid will always be a more wasteful way of funding local activities than if local governments funded activities by themselves. Aid will always be politically misallocated by Congress. Aid will always involve top-down regulations from Washington that reduce local flexibility and innnovation. And aid will always undermine federalism and the American system of limited government.

It’s time to blow up the whole system.  Title 1 and all 800 other state aid programs should be repealed.

Federal Redesign of Hot Dogs?

From a Richmond Times-Dispatch editorial, the sort of passage you think at first must be satire:

At the instigation of the American Academy of Pediatrics, federal bureaucrats at the FDA, the Department of Agriculture, and the Consumer Product Safety Commission are studying whether to require the nation’s hot-dog makers to redesign hot dogs to reduce the likelihood of choking.

But it’s not satire, as other news clips confirm.

Now, as every parent knows who makes sure to cut up a hot dog for the smallest eaters, the risk of choking on one of these food objects is not zero (though it is very, very low; 13 children’s deaths in 2006 were linked to hot-dog asphyxiation, but children eat nearly 2 billion hot dogs a year). In that sense, the proposal is less obviously batty than some other federal regulatory initiatives that have upended whole sectors of commerce over risks that have never been shown to have harmed anyone at all.

But notice that the only truly effective way to keep the familiar cylindrical hot dog off the plates of small children would be to ban it for everyone — the logical end point, perhaps, of a policy that infantilizes parents by assuming they cannot be trusted to watch out for their children’s safety. If on some future Memorial Day you find only squared-off frankfurters or triangular-prism bratwursts in the supermarket cooler, don’t say you weren’t warned.

Guess Who’s Behind the New Fire-Sprinkler Mandates

California just adopted effective next year a requirement that all new one- and two-family dwellings include indoor sprinkler systems. Other states are debating similar mandates, spurred by changes to national building code standards. Earlier legal mandates have required the inclusion of smoke alarms and carbon monoxide alarms, but the cost of those devices is relatively minor, whereas full-blown sprinkler systems add measurably to the cost of a new home, as well as posing challenges in such areas as maintenance, aesthetics, and risk of property damage through accidental activation.

It will surprise not a single reader of these columns, I suspect, to learn that the fire sprinkler industry has been a major force in pushing the new mandate. As for the opposition, home builders have managed to mount a bit of resistance – New Jersey, for example, saw the current depressed state of the residential construction business as reason to postpone its mandate for a year. But the builders are pretty much on their own in the fight, since future buyers of new homes are a group with no organized political presence whatsoever.

Real estate blogger Christopher Fountain writes that he’s “never heard of a home buyer voluntarily ordering this equipment when building a house, so it sounds to me like one more instance of people who know better dictating to those who don’t.” Exactly. A South Carolina paper quotes a state official as saying if buyers feel priced out of the new home market by the cost of the mandate, they have other ways to save money “such as choosing less expensive flooring or countertops, or not installing yard sprinklers”. Easy to make someone else’s budget decisions for them, isn’t it? And shouldn’t the “affordable housing” community be taking more of an interest?