Regulatory Restrictions on Business Have Doubled Since 1975

GrowingRegulatoryRestrictionsGraph2016-10-31.jpgSource of graph: online version of the WSJ article quoted and cited below.

(p. A2) Measuring the regulatory state is no easy task. The Code of Federal Regulations contains more than a million restrictions, as signified by the use of the words “shall,” “must,” “may not,” “required,” and “prohibited,” according to two scholars from the Mercatus Center, a free-market think tank. The total has doubled since 1975, pausing only during Ronald Reagan’s first term and Bill Clinton’s second.

Rule enforcement is also getting more serious. Responding to accusations of lax oversight in the past, federal authorities have imposed criminal penalties, in particular on financial companies, averaging $7 billion a year in the past four years, up fourfold from the prior 11, according to Brandon Garrett, a law professor at the University of Virginia.
. . .
Brent Skorup, a scholar at the Mercatus Center, says regulators like the FCC increasingly extract behavioral conditions from companies via transaction approvals rather than rule-making. For example, Comcast Corp. acquired NBC Universal in 2011 after agreeing to a long list of conditions, from not charging for faster network access (aka abiding by “net neutrality”) to expanding local, public-interest and children’s programming.

For the full commentary, see:
GREG IP. “CAPITAL ACCOUNT; AT&T Feels Growing Reach of Presidency.” The Wall Street Journal (Thurs., Oct. 27, 2016): A2.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Oct. 26, 2016 title “CAPITAL ACCOUNT; Reaction to AT&T-Time Warner Deal Shows Presidency’s Growing Reach.”)

The data presented in the left panel of the graph above is described in the following article:
Al-Ubaydli, Omar, and Patrick A. McLaughlin. “Regdata: A Numerical Database on Industry-Specific Regulations for All United States Industries and Federal Regulations, 1997-2012.” Regulation and Governance (2015), doi: 10.1111/rego.12107.

The data can be downloaded at:
http://regdata.org/data/

The Garrett results mentioned above, are reported in his article:
Garrett, Brandon L. “The Rise of Bank Prosecutions.” The Yale Law Journal Forum (May 23, 2016): 33-56.

After Global Warming Hits Vietnam: “We Live Better Now”

(p. A9) On a chilly January day recently, Do Van Duy slugged back another shot of rice liquor. It had been a good year for raising fish in the Red River delta of northern Vietnam. He and other villagers in Nam Dien had gathered to toast their success as the Lunar New Year approached–and question whether climate change is such a bad thing after all.
“We live better now,” said Mr. Duy, 31 years old, who now farms grouper, shrimp and crab in the brackish waters of the delta after giving up rice a few years ago. “If you can make the switch there’s a lot more money to be made.”
Nearly three-quarters of households in Nam Dien have abandoned rice farming, said Bui Van Cuong, a fisheries official with the People’s Commune in Nam Dien, as salt water flows farther into the delta’s farmland. “The changes are very apparent over the past 10 years,” Mr. Cuong said.
The shift is focusing attention on a difficult question: Is it better to invest resources in fighting the effects of climate change, or in helping people adapt?
. . .
“Their competitive advantage is changing,” said Le Anh Tuan, a director at the Institute for Climate Change Studies at Can Tho University. “The delta might not always be the best place to grow rice, but people can raise shrimp instead.”

For the full story, see:
JAMES HOOKWAY. “Vietnam’s New Tack in Climate Fight.” The Wall Street Journal (Thurs., Feb. 25, 2016): A9.
(Note: ellipsis added.)
(Note: the online version of the story has title “Vietnam Tries New Tack in Climate-Change Battle: Teach a Man to Fish.”)

Immigration Depresses Wages of Low-Wage Americans

(p. A11) Mr. Borjas is himself an immigrant, having at age 12 fled from Cuba to Miami with his widowed mother in 1962, just before the Cuban Missile Crisis shut down legal exits. As a labor economist, he has spent much of his academic career studying the effects of immigration on the American jobs market, often arguing that immigration depresses wages, or job opportunities, at the lower end of the scale. Here he notes that, on balance, the added production supplied by immigrants makes a modest contribution to U.S. economic growth. He generously provides readers with arguments on all sides, including Milton Friedman’s wry observation that illegal immigrants are of more net benefit to the American economy than legals because they make less use of welfare-state services.
. . .
After totting up the pluses and minuses, Mr. Borjas concludes that immigration has very little effect on the lives of most Americans. He does worry, however, that some future wave might bring along with it the “institutional, cultural and political baggage that may have hampered development in the poor countries” from which immigrants often come, and he sees a need for reforms.

For the full review, see:

GEORGE MELLOAN. “BOOKSHELF; The Immigration Debate We Need.” The Wall Street Journal (Weds., Oct. 19, 2016): A11.

(Note: ellipsis added.)

The book under review, is:
Borjas, George J. We Wanted Workers: Unraveling the Immigration Narrative. New York: W. W. Norton & Company, 2016.

Unions Spend $108 Million on 2016 Elections

UnionPresidentialElectionSpendingGraph2016-11-14.jpgSource of graph: online version of the WSJ article quoted and cited below.

(p. A1) PHILADELPHIA–U.S. labor unions are plowing money into the 2016 elections at an unprecedented rate, largely in an effort to help elect Hillary Clinton and give Democrats a majority in the Senate.

According to the most recent campaign-finance filings, unions spent about $108 million on the elections from January 2015 through the end of August [2016], a 38% jump from $78 million during the same period leading up to the 2012 election, and nearly double their 2008 total in the same period. Nearly 85% of their spending this year has supported Democrats.

For the full story, see:
BRODY MULLINS, REBECCA BALLHAUS and MICHELLE HACKMAN. “Labor Unions Step Up Presidential-Election Spending.” The Wall Street Journal (Weds., Oct. 19, 2016): A1 & A4.
(Note: ellipsis, and bracketed year, added.)
(Note: the online version of the story has the date Oct. 18, 2016, and has the title “Unions Up the Election Ante.”)

Regulations Cause Sluggish Economy by Slowing Startup Creation

StartupFormationGraph2016-10-27.jpgSource of graph: online version of the WSJ article quoted and cited below.

(p. A2) The U.S. economy is inching along, productivity is flagging and millions of Americans appear locked out of the labor market.
One key factor intertwined with this loss of dynamism: The U.S. is creating startup businesses at historically low rates.
. . .
The share of private firms less than a year old has dropped from more than 12% during much of the 1980s to only about 8% since 2010. In 2014, the most recent year of data, the startup rate was the second-lowest on record, after 2010, according to Census Bureau figures released last month, so there’s little sign of a postrecession rebound.
. . .
Rules and regulations also could be at play. Goldman Sachs economists in part blame the cumulative effect of regulations enacted since the Great Recession for reducing the availability of credit and raising the cost of doing business for small firms, making them less competitive.
. . .
There is some disagreement on whether tech firms have fallen into the same doldrums as other startups like mom-and-pop shops. Mr. Haltiwanger and colleagues at the Federal Reserve and Census Bureau find evidence they have, with significant detriment to the economy.
“It may be that we are designing things here in the U.S. as rapidly as ever,” Mr. Haltiwanger said. “We’re just not producing here. That’s not good news for U.S. productivity.”
Researchers at the Massachusetts Institute of Technology delved into state business licensing information and found somewhat different but also discouraging results. That is, tech entrepreneurs are generating good ideas and founding companies at a healthy pace, but those ventures aren’t breaking out into successful big companies.
“The system for translating good, high-quality foundings into a growth firm, that system seems to have broken,” said Scott Stern, an MIT professor and co-author of the study on startups.

For the full commentary, see:
Sparshott, Jeffrey. “THE OUTLOOK; Sputtering Startups Weigh Down Growth.” The Wall Street Journal (Mon., Oct. 24, 2016): A2.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Oct. 23, 2016 title “THE OUTLOOK; Sputtering Startups Weigh on U.S. Economic Growth.” The passages quoted above include a couple of sentences that appeared in the online, but not the print, version of the article.)

Land Use Regulations Increase Income Inequality

IncomeAndPopulationInRichAndPoorStatesGraph2016-11-14.jpgSource of graph: online version of the WSJ article quoted and cited below.

(p. A3) In this year’s election, candidates have focused blame for rising income inequality on broad economic forces, from globalization to the decline of the American manufacturing base. But a growing body of research suggests a more ordinary factor: the price of the average single-family home for sale, from Fairfield, Conn., to Portland, Ore.

According to research by Daniel Shoag, an associate professor of public policy at Harvard University, and Peter Ganong, a postdoctoral fellow at the National Bureau of Economic Research, a decadeslong trend in which the income gap between the poorest and richest states steadily closed has been upended by growth in land-use regulations.
Moving to a wealthier area in search of job opportunities has historically been a way to promote economic equality, allowing workers to pursue higher-paying jobs elsewhere. But those wage gains lose their appeal if they are eaten up by higher housing costs. The result: More people stay put and lose out on potential higher incomes.
. . .
Messrs. Shoag and Ganong looked at mentions of “land-use” in appeals-court cases and found the number of references began rising sharply around 1970, with some states seeing a much larger increase than others. For example, the share of cases mentioning land use for New York rose 265% between 1950 and 2010 and 644% in California during the same period. By contrast, it increased by only 80% in Alabama.

For the full story, see:
LAURA KUSISTO. “Land Use Rules Under Fire.” The Wall Street Journal (Weds., Oct. 19, 2016): A3.
(Note: ellipsis added.)
(Note: the online version of the story has the date Oct. 18, 2016, and has the title “As Land-Use Rules Rise, Economic Mobility Slows, Research Says.” A few extra words appear in the online version quoted above, that were left out of the print version.)

The research by Ganong and Shoag, mentioned above, is:

Ganong, Peter, and Daniel Shoag. “Why Has Regional Income Convergence in the U.S. Declined?” Harvard University, John F. Kennedy School of Government, Working Paper Series, Jan. 2015.

Let Individual Indians Own Land on Reservations

Mortgaging homes is a common way for entrepreneurs to provide initial funds for their startups. So our keeping individual Indians from owning land on reservations, cuts off their access to funds for entrepreneurship.
The commentary quoted below is related to a book edited by Anderson and contributed to by Regan.

(p. A13) . . . , Native Americans showed a remarkable ability to adapt to new goods and technology. Italian trade beads became an integral part of American Indian decoration and art. The Spanish horse transformed Plains Indian hunting and warfare.

Over centuries, however, these adaptations and innovations have been replaced by subjugation by the U.S. government. In 1831, Chief Justice John Marshall declared the Cherokees to be a “domestic dependent nation” and characterized the relationship of tribes to the U.S. as resembling “that of a ward to his guardian.” Marshall’s words were entrenched when Congress became trustee of all Indian lands and resources under the Dawes Act of 1887.
In recent decades, the government has paid lip service to “tribal sovereignty,” but in practice Native Americans have little autonomy. Tribes and individual Indians still cannot own their land on reservations. This means Native Americans cannot mortgage their assets for loans like other Americans, thus allowing them little or no access to credit. This makes it incredibly difficult to start a business in Indian Country. Even when tribes try to engage in economic activity, the feds impose mountains of regulations, all in the name of looking after Indian affairs.

For the full commentary, see:
TERRY L. ANDERSON and SHAWN REGAN. “It’s Time for the Feds to Get Out of Indian Country; A permit to develop energy resources requires 49 steps on tribal lands and just four steps off reservations.” The Wall Street Journal (Sat., Oct. 8, 2016): A13.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Oct. 7, 2016.)

The book mentioned at the top of this entry, is:
Anderson, Terry L., ed. Unlocking the Wealth of Indian Nations. Lanham, Maryland: Lexington Books, 2016.