But there is also a deeper crisis taking place. According to attorneys Christina and Timothy Sandefur, “the act represents a pervasive disrespect for the concept of the rule of law.” They discuss in depth the law’s many expansions of administrative authority, its unpredictable interpretation by the courts, its arbitrary enforcement, and the very means by which Congress chose to pass it.
“In the pursuit of progressive goals, the Obama administration and its congressional allies have done long‐lasting damage to a constitutional order that was meant to preserve individual liberty by cabining government power along clear, predictable, and democratically accountable lines,” the authors conclude.
While cost‐benefit analysis (CBA) has become the standard method used by regulatory agencies like the Environmental Protection Agency to evaluate potential regulations, there is a puzzling exception. The country’s financial regulatory agencies do not use it. In exploring this issue, professors Eric A. Posner and E. Glen Weyl find that CBA is no panacea. “But it is hard to deny that the twin requirements of CBA and OIRA [Office of Information and Regulatory Affairs] supervision have improved the performance of agencies compared to the pre‐1981 status quo,” they write, “and there is every reason to believe that the lesson will hold good for financial regulators as well.”
What social return should the public sector pursue for government investment — meaning spending that is meant to yield long‐term benefits? Richard O. Zerbe Jr., a professor of public affairs, relies on economic analysis to argue that policymakers should be mindful of opportunity costs. “When government builds a bridge or invests in early childhood education, it should expect a rate of return at least equal to the yield from alternative uses of money,” he writes — a cost which consists of both reduced consumption and displaced private capital.
California’s Proposition 65, the Safe Drinking Water and Toxic Enforcement Act of 1986, requires the state to publish a list of chemicals known to cause cancer or reproductive harm — a list that now includes well over 800 chemicals — and requires businesses to notify consumers when significant amounts of these chemicals are used. In his article, economist Michael L. Marlow asks whether the benefits of this “carcinogen right to know” law outweigh the costs. He finds that public health has not been demonstrably improved because of the law. “Public health also suffers if Proposition 65 lessens efforts of increasing public awareness of how to reduce exposures to established risk factors for cancer and reproductive harm,” Marlow concludes.
Other contributors include Morgan Ricks on “A Simpler Approach to Financial Reform,” Brent Skorup on “Getting Away from GOSPLAN,” and Thomas A. Firey asking “Is IPAB a Paper Tiger?” As always, the Winter 2013–2014 issue concludes with reviews of books on private schools for the poor, perverse incentives in the financial world, the value of immigration, and much more. It wraps up with editor Peter Van Doren’s survey of recent academic papers, as well as a final word from Marni Soupcoff on the Food and Drug Administration’s regulatory involvement with mobile health apps.