American politics tends to focus on policy considerations as people debate whether this or that law or regulation is the proper means of fixing a given problem. But in this episode of Unintended Consequences, Paul and Peter grapple with the underrated question of enforcement of the law. Overly rigorous enforcement of the rules can generate public backlash, while under-enforcement can breed contempt for the law. That suggests that there is an “optimal hypocrisy” for regulatory enforcement.

That theme runs through both topics from this episode: water management and bureaucratic neutrality. First, out in the West, water shortages have been exacerbated by the lack of market-based pricing. However, there are promising efforts out of Idaho to create tradable property rights in underground water that could mitigate water misallocation if more broadly adopted. By contrast, in the East, policymakers are confronted with the opposite problem as floods and hurricanes expose the weaknesses in America’s flood insurance system. Yet efforts to fix either problem tend to run into a torrent of opposition given that the public has gotten used to a poorly enforced water policy regime, and then reflexively oppose reforms that would introduce more accurate pricing.

Finally, Paul and Peter consider Stuart Shapiro’s call for neutrality among federally-employed economists. But neutrality is a conflicted concept; it can either mean showing deference to expertise or deferring to the partisan wishes of elected officials. Furthermore, any effort to enforce a standard of bureaucratic neutrality runs into the inherent difficulty of regulating something that is ultimately a messy, cultural phenomenon.