Does Politics Improve Regulation?
Economist Adam Smith during
his regrettable long-hair phase.
At least since college, Blawgletter has admired the exquisite contradictions of government regulation, which business trial lawyers encounter all the time. Economic theory, on the one hand, teaches that any meddling with market forces -- whether by bureaucrats or private monopolists -- hurts overall "consumer welfare", the Holy Grail of economics ever since Adam Smith published The Wealth of Nations (1776).
A problem with the theory, on the other hand, results from the sad fact that we don't live in perfect world, in which perfect competition holds sway. No, things like the sugar tariff on imports of sweet, sweet sucrose; congressional subsidies for ethanol; and, yes, licensing requirements for lawyers assure that we pay more than we should for all kinds of stuff.
But do we really overpay for the things we want or need? Or does the political process give us the imperfect competition (and prices) that we want and deserve?
Last week, the administration answered yes to both questions when it issued an executive order that requires federal agencies to justify regulations to political appointees. The spokesman for the White House, per the NYT, described the directive as a "classic good-government measure that will make federal agencies more open and accountable."
What do y'all think? Will requiring a political okay for regulations increase consumer welfare? Do we want to make agencies "more open and accountable" to us? Blawgletter wants to know.
Subscribe to increase your own consumer welfare -- cost free.
T have commented on your posting on www.adamsmithslostlegacy.com
Smith had quite a strong suit of areas where he believed and asserted so that it would be advisable for government to intervene in markets and stop intervening where it was 'absurd' Mercantile policies.
It is not correct to say he opposed all interventions, a point that may be known to the trial lawyer on the other side of a case. A trial lawyer should be wary of exposing a gap in his evidence...
Otherwise, I like your Blog
Posted by: Gavin Kennedy | January 30, 2007 at 02:47 PM