One often hears about the Trump administration’s deregulation push. But how real is it? Is the number of regulations rising or falling? One Mercatus Center study found that growth in federal regulations slowed during 2017:
As the saying goes, talk is cheap. What do the numbers—the numerous metrics of the stock and flow of regulation—tell us about the Trump administration’s first year of regulatory reform? For one, the growth of regulation has clearly slowed. During President Trump’s first year, federal regulations grew by about 0.65 percent, less than the growth rate of any other president’s first year in office since our data begin in 1970. This rate of growth is also less than one-third of the long-term annual growth rate for federal regulations, which, from 1970 to 2016, was about 2.1 percent.
Slower growth is a good thing, but it doesn’t represent “deregulation”.
There are many areas where regulation is still increasing:
Under new regulations the Treasury Department put in place Wednesday, foreign investments that result in a non-controlling equity stake in U.S. biotechs would be subject to review by the Committee on Foreign Investment into the United States, or CFIUS. The expanded rules also cover 26 other critical fields, including guided missile technology and nuclear electric power generation. . . .
Broadening CFIUS’ scope could have serious implications for early-stage U.S. biotechs, which have seen an influx of venture money from abroad.
Through the first eight months of 2018, cash from Chinese and other Asian investors made up nearly half of venture capital investments flowing into U.S. biotechs, according to data from Pitchbook cited by Reuters. That figure is up sharply from just two years ago, when Chinese and Asian investment made up a little more than a tenth of deal flow into U.S. biotechs.
Here’s another example:
The Trump administration is using the country’s vast and nearly opaque immigration bureaucracy to constrict the flow of foreign workers into the United States by throwing up new roadblocks to limit legal arrivals.
The government is denying more work visas, asking applicants to provide additional information and delaying approvals more frequently than just a year earlier. Hospitals, hotels, technology companies and other businesses say they are now struggling to fill jobs with the foreign workers they need.
And another:
The bill includes a provision to help stop the flow of illicit opioids into the country by mail, especially synthetic fentanyl and its analogs, which are fueling the rise in overdose deaths. The provision was pushed by Senator Rob Portman, Republican of Ohio, whose state has been especially hammered by the opioid epidemic.
It will require the United States Postal Service to start collecting information on international mail shipments, just as private carriers like Fed Ex and DHL already have to do. By the end of this year, the Postal Service will need to provide the name and address of the sender and the contents of the package, as described by the sender, for at least 70 percent of all international packages, including all of those from China. It will have to provide the information on all such shipments by the end of 2020.
The Postal Service could block or destroy shipments for which the information is not provided.
Foreign investment, immigration paperwork and mail delivery. Three very different types of regulation, with one thing in common. The US government seems increasingly suspicious of the rest of the world. Look for the US to continue taking regulatory steps to close itself off from the rest of the world. I expect us to remain much more open than places like Cuba and North Korea, but less so than places like Canada and Australia.
Meanwhile, I’m increasingly suspicious of claims that we are in a deregulatory environment. Environmental regulations have recently been pulled back, but many other types of regulations are clearly increasing.
Slightly off topic. David Henderson has a recent post that quotes Larry Summers as follows:
Suppose China had been fully compliant with every trade and investment rule and had been as open to the world as the most open countries at its income level. China might have grown faster because it reformed more rapidly, or it might have grown more slowly because of reduced subsidies or more foreign competition.
David makes a number of excellent points in response to Summers, but I’d like to add one more. When large, mainstream international organizations try to help struggling developing countries with economic reforms, they generally encourage those countries to reduce subsidies and open their economies to trade. So Summers has it backwards; fewer Chinese subsidies and more openness would have led to faster growth, not slower.
READER COMMENTS
Thaomas
Dec 12 2018 at 3:25pm
Rather than know whether there is more or less regulation I’d like to know if the regulations that are put in place or are being removed have a positive or a negative cost benefit ratios. I presume, but I don’t know for sure, that the environmental regulations that have been removed were preventing more harm than their cost.
Mark Z
Dec 12 2018 at 4:57pm
I don’t think that’s a warranted assumption. Even for something like CO2 emissions, where the tax on emission is 0, regulations designed to prevent some kind of activity that emits CO2 isn’t necessarily cost efficient, even if the reduction in CO2 emission they cause is less than the reduction that would be induced by the optimal Pigovian tax.
In other words, even when a type of pollution is ‘underpriced’ (as when there is no Pigovian tax on it at all), a direct control style regulation against it can still cause more harm than good.
Thaomas
Dec 13 2018 at 6:48am
I agree that a regulation CAN be inefficient (net negative). I just doubt that the environmental ones HAVE been. Of course if the CO2 regulations were replaced with a CO2 net emissions tax that would be a slam dunk.
robc
Dec 13 2018 at 5:26pm
Based on a 20 year old interview with Coase, 40 years ago he found that we were past the point that any new regulation was positive.
I think we are so far down the law of diminishing returns curve that it is basically impossible for any new regulation to be net positive and removing almost any regulation at random would be positive.
Smart deregulation would be better than random deregulation, but I think we are at the point that even random deregulation would be good.
David Henderson
Dec 12 2018 at 3:48pm
Scott,
Thanks for your friendly amendment about the Larry Summers statement. I should have caught that. You are right.
Also, good points about regulation. My take is that we are already at the point where the United States is less open than my native Canada. But I haven’t studied it carefully.
Matthias Goergens
Dec 13 2018 at 8:21am
https://www.alt-m.org/2015/07/29/there-was-no-place-like-canada/
And that might have been true for quite a while already?
Alan Goldhammer
Dec 12 2018 at 6:24pm
Scott, it’s more complicated than just ceasing to do new regulations. Unwinding existing regulations is exceedingly difficult as the notice and comment process has to be started over again when a replacement rule is proposed. The only exception are rules that were done in the later stages of the Obama Administration that could easily be repealed under the Regulatory Review Act (I think that is the name of the statute).
Benjamin Cole
Dec 12 2018 at 10:01pm
“Hospitals, hotels, technology companies and other businesses say they are now struggling to fill jobs with the foreign workers they need.”–NYT.
Now suppose you are an average guy in the US who sometimes, through economic dislocation, a geographic move, or by re-entering the workforce after re-training, has to find a job. Recent college graduates too.
Would the quote from the NYT resonate?
And what ever happened to the price signal?
Labor forces are flexible.
Suppose wages rise enough that many young people, who now
“waste” four years in college, or even seven years to get a law degree, instead say, “Shove it! I can start working now (and become a productive citizen), and make good money and get a lot of valuable OTJ training.”
Perhaps employers will dispense with credentialism, and embrace OTJ training models.
The price signal can work wonders, if allowed….
From Indeed.com, here is a salary breakdown on job openings in the hotel sector:
Salary Estimate
$20,000(4522)
$25,000(2501)
$30,000(1406)
$35,000(920)
$40,000(681)
https://www.indeed.com/q-Hotel-Worker-jobs.html
So the bulk of hotel employees in the US make $12.50 an hour or less, assuming 2000 hours a year on the job.
I think it would be a huge positive if real wages rise in the US.
Larry
Dec 14 2018 at 12:31am
I read that the 2 regs go for every new one goal had been exceeded. Further, Gorsuch/Kavanaugh are still rumored to limit Chevron deference, which would be a huge rollback of regulatory power. A case is on the docket.
The Prez for all his failings is disposed to reduce regs. Energy is looking good. Net neutrality is stuck.
Would getting rid of DACA be deregulation?
Michael Byrnes
Dec 19 2018 at 6:26am
I disagree that a rollbacl of Chevron deference (which I agree is likely to happen) would be a reduction in regulatory power. It wouldbe a transfer of regulatory power from the executive branch to the judicial.
TMC
Dec 17 2018 at 12:43pm
This article says 4-1 reduction
https://www.forbes.com/sites/waynecrews/2018/10/23/trump-exceeds-one-in-two-out-goals-on-cutting-regulations-but-it-may-be-getting-tougher/#2662a5283d40
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