REFORMING FEDERAL REGULATION by Robert E. & William D. Nordhaus Litan


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Writing what amounts to a legal brief (theory, logic, enumeration, citation), attorney Litan and economist Nordhaus argue that the chaotic state of federal regulation should and can be brought under one, all-encompassing control--ideally, through a ""federal regulatory budget""; pragmatically, via a ""legislated regulatory calendar."" They also believe, analogously, that Adam Smith's Invisible Hand guides activities in the private sector and that the federal expenditure budget, if not a perfectly functioning mechanism, can serve as a useful model. Their dubious vision of reducing chaos to order apart, they do provide a systematic analysis of some of the present shortcomings of the regulatory process: the fragmentation, overlap, unintended consequences; the lack of provision for either political accountability or economic efficiency. In the latter case, they would substitute ""less costly marketlike incentives"" for ""rigid command-and-control regulatory techniques""--e.g., tax industrial polluters rather than hold them to emission standards. They also review recent reform proposals and regulatory-relief actions. But their approach to regulatory impacts, past and present, is also limited by their narrow focus on ""private sector compliance expenditures."" An early chapter worries the question of what proportion of the recent drop in US productivity should be attributed to compliance costs, and comes up with only the shakiest answers--while acknowledging the real social gains. A late chapter reproduces and endorses Reagan administration claims to having reduced those costs by $740 billion as a result of easing standards for auto rims and bumpers--an area where the costs to consumers are just now coming to prominent notice. Another saving--of $400 billion--is claimed on bilingual education. What the book may best demonstrate, indeed, is that these problems don't lend themselves to either lawyers' or money-managers' solutions.

Pub Date: Aug. 17th, 1983
Publisher: Yale Univ. Press