Public Choice – artdiamondblog.com

The Democratic Deep State Looked the Other Way as Fraudsters Stole 10 BILLION Healthcare Dollars

When DOGE fired federal workers we saw televised scenes where the fired workers expressed outrage at how taxpayers would be hurt by the loss of devoted civil servants. So where were the devoted civil servants in 2023? Were they doing their jobs to be alert to the Medicare, and personal identity, fraud that cost the public about 10 billion (that is “billion” with a “b”) dollars?

When Elon Musk’s DOGE uncovered myriad examples of major fraud, I saw Democrats on television complain that of course they were against fraud too, but it should be pursued more slowly and systematically, following traditional procedures. The Democrats were running the federal government in 2023. What procedure were the Democrats using, fast or slow, to protect taxpayers from the fraudulent loss of 10 billion (that is “billion” with a “b”) dollars?

Our jerry-rigged government-run-and-regulated health care system is rife with middlemen. In a true free-market healthcare system, patients would directly pay for healthcare, without middlemen. Patients would have the information, and the incentive to act on the information, to detect, report, and pursue fraudsters. Some fraud would exist under any system, but my hypothesis is that much less of it would exist under a free-market system.

(If you are concerned that patients would not have enough funds to pay for healthcare themselves, we could adopt the much better insurance system once proposed by Susan Feigenbaum, combined with deregulation that would reduce healthcare costs–like no longer mandating Phase 3 clinical trials.)

And my secondary hypothesis is that if we have to have a jerry-rigged government-run-and-regulated system, the Republicans, a party full of former bourgeois entrepreneurs and business managers, will usually do a marginally better job of detecting and pursuing fraud.

I wonder if these hypotheses have ever been researched by any of those noble economists studying the field of Public Choice?

(p. A18) When hundreds of thousands of people enrolled in Medicare were billed for expensive medical equipment they never asked for in 2023, it was part of a $10.6 billion fraud, among the largest such schemes in the program’s history, federal prosecutors said this week.

. . .

Those involved in the fraud bought dozens of companies that were accredited to submit claims to Medicare and the program’s supplemental insurers, prosecutors say.

Then, using personal information stolen from more than a million Americans, the defendants filed billions of dollars in claims for equipment that had not been ordered by people enrolled in Medicare and was not delivered to them, according to the indictment.

Of the $10.6 billion that was fraudulently billed, the indictment says, the defendants collected more than $900 million, most of it coming from private “Medigap” insurers and the rest from the Medicare program itself.

Even if the patients themselves did not pay for the phantom supplies, which included urinary catheters, braces and other durable medical equipment, such schemes can affect Medicare recipients by causing premium costs to rise.

. . .

In 2019, the Justice Department uncovered a scheme that it said had defrauded the program of more than $1 billion with phony claims for back and knee braces. In April 2023, prosecutors charged 18 defendants in a nearly $500 million scheme that involved false billing for Covid-19 tests that were never administered.

For the full story see:

Santul Nerkar. “11 Accused of Medicare Fraud In Scheme Based in Russia.” The New York Times (Sat., June 18, 2025): A18.

(Note: ellipses added.)

(Note: the online version of the story has the date June 27, 2025, and has the title “U.S. Charges 11 in Russia-Based Scheme to Bilk Medicare of $10.6 Billion.”)

The better healthcare insurance system proposed by Susan Feigenbaum was proposed in:

Feigenbaum, Susan. “Body Shop’ Economics: What’s Good for Our Cars May Be Good for Our Health.” Regulation 15, no. 4 (Fall 1992): 25-31.

Computer Chip Industrial Policy Subsidies Are an Unfair Waste of Taxpayer Funds

An “industrial policy” occurs when the federal government attempts to pick a technology that will be important in the future, and then subsidize it. T.J. Rodgers is an insider in the computer chip industry and has written a credible op-ed analyzing two attempts at industrial policy in his industry, the Sematech consortium in 1987, and the Chips and Science Act in 2022.

He makes a compelling case that Sematech did not work and that the Chips and Science Act is not working either.

Rodgers gives us more evidence that Secretary of the Treasury and Harvard President Larry Summers was right when he wrote “the government is a crappy venture capitalist.”

If the feds’ industrial policy on computer chips has failed, why do we think its industrial policy on cancer cures will succeed? (Nixon and Biden’s cancer “moonshots” amounted to picking, and then subsidizing, what they hoped would be cancer cures.)

By the way, when Rodgers stood up against welfare to his industry, he appears to have been an exemplar of Robert Nozick’s ideal CEO: maximizing profits subject to ethical side-constraints.

(p. A15) My mother was a fifth-grade teacher in Oshkosh, Wis. She earned $25,000 a year. Why should chip companies, some of the wealthiest corporations in the world, take money from her and other ordinary citizens? Today’s massive $280 billion Chips and Science Act of 2022, the latest semiconductor welfare program, is even less justified than Sematech was.

. . .

To my knowledge, Sematech contributed nothing of note to U.S. semiconductor technology. Its Final Report in 1997 served up platitudes about “catching up with Japan” and fostering “industry cooperation.”

Decades later, the Semiconductor Industry Association—now a group of lobbyists in Washington—began “saving” the chip industry again. This time the target is China, despite the fact that its best wafer foundry is SMIC, an also-ran in the foundry business. China is less a competitive threat today than Japan was in 1987.

. . .

Today, 100 high-performance computers can be put on one chip. The companies that know how to design 100-billion-transistor chips for a critical function such as artificial intelligence are much more valuable than the companies that carve commodity chips out of silicon wafers, like those in China. While the biggest chip-manufacturing company in China is worth $54 billion, a single U.S. chip company, Nvidia, is worth $3.4 trillion—58 times as much—and it doesn’t even make its own chips. Why are we doing this again?

For the full commentary see:

T.J. Rodgers. “Semiconductor Subsidies? Tried and Failed.” The Wall Street Journal (Weds., June 4, 2025): A15.

(Note: ellipses added.)

(Note: the online version of the commentary has the date June 3, 2025, and has the same title as the print version.)

Robert Nozick discusses ethical side constraints in:

Nozick, Robert. Anarchy, State, and Utopia. New York: Basic Books, Inc., 1974.

“Gold Standard” RCT Studies Do Not Always Agree on Broad Issues

Randomized double-blind clinical trials (RCTs) are usually labeled the “gold standard” of medical evidence. But any given clinical trial can be done in an infinite number of ways. The length and duration of the RCT can vary. The eligibility requirements can vary. The definition of the placebo or comparison treatment can vary.

So on the broad issue of whether red meat is good for the heart, an RCT that compares the heart effects of red meat versus the heart effects of chicken, can yield different results than an RCT that compares the heart effects of red meat versus the heart effects of a plant-based diet.

Both RCTs might be competently done, involving no dishonesty or fraud.

We tend to overgeneralize the results of an RCT, for instance saying “red meat is heart healthy,” or “red meat is not heart healthy.” Whereas all we are justified in saying is “red meat is equally heart healthy as chicken” and “read meat is less heart healthy than a plant-based diet.”

Since RCTs are expensive and time-consuming, physicians and patients will often have to choose between treatments where no RCT has been done where the researchers made the choices that are most relevant to the patient’s situation.

And in an environment where RCT costs are high and funding is scarce, are researchers to be condemned if among the myriad varying ways of setting up the RCT, they choose the ways most likely to yield the results that will be appealing to their funder?

The article quoted below, in passages I did not quote, assumes this is only an issue with industry-funded research. But government funding review panels also have preferred outcomes. For example, Charles Piller in Doctored has recently documented that government funders have been more likely to fund RCTs that support the amyloid hypothesis of the cause of Alzheimer’s.

So is there hope for those who want to take effective action against dire disease? Yes, we can recognize that not all sound actionable evidence comes from RCTs. We can stop mandating Phase 3 trials, so that a more diverse assortment of plausible therapies can be explored. We can encourage diverse, decentralized funding sources.

(p. D6) In a review published last week in the American Journal of Clinical Nutrition, scientists came to a concerning conclusion. Red meat appeared healthier in studies that were funded by the red meat industry.

. . .

Past research funded by the sugar industry, for instance, has downplayed the relationship between sugar and health conditions like obesity and heart disease. And studies funded by the alcohol industry have suggested that moderate drinking could be part of a healthy diet.

Miguel López Moreno, a researcher at Francisco de Vitoria University in Spain who led the new analysis, said in an email that he wanted to know if similar issues were happening with the research on unprocessed red meat.

. . .

Dr. Moreno and his colleagues found that the trials with funding from the red meat industry were nearly four times as likely to report favorable or neutral cardiovascular results after eating unprocessed red meat when compared with the studies with no such links.

. . .

These differing results may have stemmed from how the studies were set up in the first place, Dr. Tobias wrote in an editorial for the American Journal of Clinical Nutrition that accompanied the new study.

Individual nutrition studies can be good at showing how the health effects of certain foods compare with those of other specific foods. But to demonstrate whether a particular food, or food group like red meat, is good or bad for health in general, scientists must look at the results from many different studies that compare it to all possible food groups and diets.

The new review showed that, on the whole, the industry-funded red meat studies neglected to compare red meat to the full range of foods people might eat — including food we know to be good for the heart like whole grains or plant-based protein sources such as tofu, nuts or legumes. Instead, many of the studies compared unprocessed red meat to other types of animal protein like chicken or fish, or to carbohydrates like bagels, pasta or rice.

The independently funded studies, on the other hand, compared red meat to “the full spectrum” of different diets — including other types of meat, whole grains and heart-healthy plant foods like soy products, nuts and beans — Dr. Tobias said. This more comprehensive look offers a fuller picture of red meat’s risks or benefits, she said.

. . .

A spokeswoman for the National Cattlemen’s Beef Association said in an email that “beef farmers and ranchers support gold standard scientific research,” and that both animal and plant sources of protein can be part of a heart-healthy diet.

For the full story see:

Caroline Hopkins Legaspi. “Eyes on the Outcomes Of Red Meat Research.” The New York Times (Tues., May 27, 2025): D6.

(Note: ellipses added.)

(Note: the online version of the story has the date May 20, 2025, and has the title “Is Red Meat Bad for Your Heart? It May Depend on Who Funded the Study.”)

The academic article co-authored by Moreno and mentioned above is:

López-Moreno, Miguel, Ujué Fresán, Carlos Marchena-Giráldez, Gabriele Bertotti, and Alberto Roldán-Ruiz. “Industry Study Sponsorship and Conflicts of Interest on the Effect of Unprocessed Red Meat on Cardiovascular Disease Risk: A Systematic Review of Clinical Trials.” The American Journal of Clinical Nutrition 121, no. 6 (June 2025): 1246-57.

Some other articles discussing cases where industry funding is alleged to have funded biased research are:

Anahad O’Connor. “Sugar Backers Paid to Shift Blame to Fat.” The New York Times (Tues., Sept. 13, 2016): A1 & ?.

(Note: the online version of the story has the date Sept. 12, 2016, and has the title “How the Sugar Industry Shifted Blame to Fat.”)

Alice Callahan. “Is Fake Meat Superior to the Real Thing?” The New York Times (Tues., Feb. 18, 2025): D7.

(Note: the online version of the story has the date Feb. 17, 2025, and has the title “Is Fake Meat Better for You Than Real Meat?”)

Roni Caryn Rabin. “U.S. Wooed Alcohol Industry for a Drinking Study.” The New York Times, First Section (Sun., March 18, 2018): 1 & ??.

(Note: the online version of the story has the date March 17, 2018, and has the title “Federal Agency Courted Alcohol Industry to Fund Study on Benefits of Moderate Drinking.”)

Correll Managed Georgia-Pacific Well and Then Used Those Skills to Save a Failing Hospital

In my Openness book, I make the case for the many benefits of an economic system of innovative dynamism. One of the lesser, but still important, benefits was first identified by Joseph Schumpeter. He argued for a spillover effect of innovative dynamism. The skills, knowledge, and technologies created by innovative entrepreneurs in the for-profit sector of the economy, are also applied and imitated in the nonprofit and government sectors. So where there is innovative dynamism, not only is the market more creative and efficient, but both the nonprofit and the government sectors are more creative and efficient.

A good example may be Pete Correll who acted entrepreneurially as CEO of Georgia-Pacific to bring more stability to the business by acquiring the James River Corporation, maker of Quilted Northern, and guided the Georgia-Pacific firm through years of lawsuits over asbestos. He eventually sold Georgia-Pacific to Koch Industries, Inc. My impression is that Charles Koch then applied his market-based management system to make the Georgia-Pacific part of his business much more efficient and innovative. [Query: does Koch’s achievement undermine my claim that Pete Correll had acted entrepreneurially in his earlier management of Georgia-Pacific? Or can both Correll and Koch have been good manager/entrepreneurs, but in different ways at different times?]

But according to his obituary in the WSJ, his greatest achievement may have been in taking over a near-bankrupt Atlanta public (aka government) hospital, reorganizing it from government to nonprofit, and modernizing its management and technology.

Carrell’s obituary in the WSJ:

James R. Hagerty. “CEO Helped Save A Public Hospital.” The Wall Street Journal (Sat., June 5, 2021 [sic]): A9.

(Note: the online version of the WSJ obituary has the date June 2, 2021 [sic], and has the title “Retired CEO Saved an Atlanta Public Hospital.”)

For Charles Koch’s entrepreneurial market-based management system see:

Koch, Charles G. The Science of Success: How Market-Based Management Built the World’s Largest Private Company. Hoboken, NJ: Wiley & Sons, Inc., 2007.

My book mentioned in my initial comments is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

Trump Is a Change Agent Because He Can Take the Ill Will of the Stagnationists

In an earlier blog entry I pondered Charlie Munger’s sage analysis that agents of change must often be willing to take the “ill will” aimed at them from the stagnationists who benefit from stasis. The stagnationists may be corrupt, or incompetent, or simply lack the imagination or the energy to do something in a better way.

Agents of change are scarce because most of us care a lot about what other people think of us. We experience psychic stress if we are systematically stigmatized, or even just ignored. Donald Trump may be capable of making major changes because, through temperament or resolve, he has found a way to shut out the psychic stress; a way to take the ill will.

Kessler’s commentary, quoted below, was published early in the pandemic, on Feb. 10, 2020. At that point Kessler believed that Trump’s success with the economy would get Trump re-elected. But as the months of 2020 rolled on, the pandemic increasingly hurt Trump’s prospects; hence the source of the pandemic still matters a lot, and whether the vaccine was intentionally delayed a few weeks, to release it just after the election, also still matters a lot.

A key question is whether Trump still has the core “agenda of tax cuts, deregulation and originalist judges” that Kessler believed was the Trump core agenda in 2016.

I hope yes, but fear no. In 2025 are tariffs and industrial policy part of the “distraction” (aka “MacGuffin”) Kessler posits, or are they part of Trump’s core agenda?

(p. A15) Is he a disease or a cure? Like him or hate him, there’s tons of spilled ink trying to assess President Trump’s governing style. To me, the key to understanding Trumpism is remembering why he was elected.

What do I mean? Voters chose Donald Trump as an antidote to the growing inflammation caused by the (OK, deep breath . . .) prosperity-crushing, speech-inhibiting, nanny state-building, carbon-obsessing, patriarchy-bashing, implicit bias-accusing, tokey-wokey, globalist, swamp-creature governing class—all perfectly embodied by the Democrats’ 2016 nominee. On taking office, Mr. Trump proceeded to hire smart people and create a massive diversion (tweets, border walls, tariffs) as a smokescreen to let them implement an agenda of tax cuts, deregulation and originalist judges.

Those reforms have left the market free to do its magic and got the economy grooving like it’s 1999. The daily Trump hurricane—like the commotion over the Chiefs from Kansas—makes the media focus on the all-powerful wizard while ignoring the policy makers behind the curtain.

Alfred Hitchcock called this kind of distraction a “MacGuffin”—something that moves the plot along and provides motivation for the characters, but is itself unimportant, insignificant or irrelevant. It can be a kind of sleight of hand, a distraction, and Mr. Trump uses his own public persona as a MacGuffin in precisely that way. The mobs decked in “Resist” jewelry fall for it every time.

For example, Sen. Bernie Sanders used his remarks during the Senate impeachment trial to point out that the media had documented some 16,200 alleged lies by President Trump. The MacGuffin worked! Mr. Sanders and his peers are focused on the president’s words, while most voters see the real plot unfolding in America—millions of jobs and rising wages.

The president’s success comes from his ability to shrug off critics. . . . Rather than cower at the criticism he faces from the mobs, he probably smirks and thinks to himself, “Yeah, I don’t believe in that” and tweets away.

That’s the only reaction that can withstand today’s far left, which has become increasingly self-righteous.

For the full commentary see:

Andy Kessler. “President Donald J. MacGuffin.” The Wall Street Journal (Monday, February 10, 2020 [sic]): A17.

(Note: ellipses added.)

(Note: the online version of the commentary has the date February 9, 2020 [sic], and has the same title as the print version.)

If Corn Syrup Hurts Health Then Government Should Stop Subsidizing Corn Farming and Stop Quotas on Sugar Imports

Every semester for many years I would conclude my micro principles class discussing the ill effects of the U.S. government imposing quotas on the importation of sugar. I would point out that the quotas increase the price of sugar for American consumers. Since corn syrup is a substitute for sugar, the increase in the price of sugar will increase the demand for corn syrup.

To support the ill effects of corn syrup, I used to cite a commentary by Michael Waldholz:

In a speech to the International Congress on Obesity last summer, George Bray, a recognized expert on weight gain, said high fructose corn syrup is a “ticking bomb” in our diet because it is more readily converted into fat than other sugars. Unlike other sugars, fructose doesn’t trigger the release of insulin, which controls sugar consumption by telling the brain to send out a feeling of fullness. (Waldholz 2003, p. D3)

It would be interesting to check the current state of the evidence on whether Bray’s claim is true. But if so, then it provides support for Robert F. Kennedy, Jr.’s current initiative against corn syrup, which was discussed in a full-page article in the NYT in December 2024.

Paradoxically, the U.S. government increases the consumption of corn syrup in multiple ways. In my principles classes I pointed out the indirect effect of sugar quotas. The NYT article also points out the subsidies for corn production.

Kennedy wants to ban the use of corn syrup products in federally subsidized school lunches and ban their purchase using federal food stamps. He should also lobby his boss to end federal subsidies for corn production and end the federal quota program on sugar.

The WSJ commentary on corn syrup is:

Waldholz, Michael “Let’s Subtract ‘Added Sugar’ from Our Diets.” The Wall Street Journal (Thurs., Feb. 20, 2003): D3.

(Note: the online version of the Waldholz commentary has the same date as the print version and has the title “Let’s Ditch ‘Added Sugar’ From Our Regular Diets.”)

The NYT article on corn syrup is:

Jonathan Weisman. “Kennedy’s Crusade Comes to Trump Country.” The New York Times (Weds., December 11, 2024): A11.

(Note: the online version of the NYT article has the date Dec. 10, 2024, and has the title “Kennedy’s War on Corn Syrup Brings a Health Crusade to Trump Country.”)

Rampant Fraud in ‘Skin’ Bandages Paid by Medicare

A “quirk” in the Medicare law allows ‘skin’ bandage firms to charge, and have Medicare pay them, exorbitant prices. Are such quirks accidents or intentional? Medicare rules are so voluminous and obscure that few have an incentive to look carefully at the details. But the firms selling ‘skin’ bandages had an incentive. Entrepreneurs within these firms saw an opportunity and seized it. But they are what William Baumol called “destructive entrepreneurs.” Their energy and talent works against the general good.

Since patients are not paying, they have little incentive to reveal the fraud. So the taxpayers are robbed. In a system where the patients are the payers they would have an incentive to reveal fraud, and to seek alternatives to over-priced medical therapies.

But what of the poor, you ask? Susan Feigenbaum proposed an insurance system where patients would receive lump sum payments for different ailments. Then poor patients could be payers, and have the incentives of payer.

(p. 1) Seniors across the country are wearing very expensive bandages.

Made of dried bits of placenta, the paper-thin patches cover stubborn wounds and can cost thousands of dollars per square inch.

Some research has found that such “skin substitutes” help certain wounds heal. But in the past few years, dozens of unstudied and costly products have flooded the market.

Bandage companies set ever-rising prices for new brands of the products, taking advantage of a loophole in Medicare rules, The New York Times found. Some doctors then buy the coverings at large discounts but charge Medicare the full sticker price, pocketing the difference.

Partly because of these financial incentives, many patients receive the bandages who do not need them. The result, experts said, is one of the largest examples of Medicare waste in history.

Private insurers rarely pay for skin substitutes, arguing that they are unproven and unnecessary. But Medicare, the government insurance program for seniors, routinely covers them. Spending on skin substitutes exceeded $10 billion in 2024, more than double the figure in 2023, according to an analysis of Medicare data done for The Times by Early Read, a firm that evaluates costs for large health companies.

Medicare now spends more on the bandages than on ambulance rides, anesthesia or CT scans, the analysis found.

. . .

(p. 19) . . . experts in health care costs said the spike had been driven . . . by sellers and doctors taking advantage of Medicare’s pricing rules. The government will reimburse any price that a company sets for brand-new skin substitutes, even if it is far above the market average. The higher the price, the larger the doctors’ cut.

And the bigger the bandage, the more they can charge. For one patient in Nevada, Medicare spent $14 million on skin substitutes over the course of a year, according to billing records reviewed by The Times. The wound of a patient in Washington State persisted after Medicare paid $6 million for the coverings. A man in Texas got $1.3 million of bandages despite having no wound at all. Health executives trying to ferret out suspicious spending identified these patients and shared their stories with The Times.

As the Trump administration — and particularly the new Department of Government Efficiency run by Elon Musk — aims to shrink the federal purse, profligate Medicare spending is a ripe target, experts said.

Companies have billed Medicare for hundreds of thousands of urinary catheters that doctors never ordered. Other schemes have peddled urine tests and knee braces. In 2023, a federal watchdog agency flagged skin substitute spending as wasteful for both taxpayers and Medicare enrollees, who ultimately pay the costs with higher premiums.

“It’s the patients, it’s the taxpayers — unfortunately everyone is footing a part of the bill for this outsized spend,” said Dana Rye, an executive with Duly Health and Care, a Chicago-based medical group where payments for skin substitutes have risen 1,400 percent since 2022.

. . .

Five years ago, the most expensive skin substitute cost $1,042 per square inch, while some were as cheap as $45. Today, the three most expensive products on the market each cost more than $21,000. (Samaritan Biologics, a company in Memphis that sells the three products, did not answer questions about why they cost so much.)

Companies can set such high prices because of a quirk in Medicare pricing rules, industry experts said. For the first six months of a new bandage product’s life, Medicare will set the reimbursement rate at whatever price a company chooses. After that, the agency adjusts the reimbursement to reflect the actual price paid by doctors after any discounts.

To circumvent the reimbursement drop, some companies simply roll out new products.

In April 2023, Medicare began reimbursing $6,497 for every square inch of a bandage called Zenith, sold by Legacy Medical Consultants, a company in Fort Worth, Texas. Six months later, Zenith’s reimbursement fell to $2,746.

That month, October 2023, Medicare began reimbursing $6,490 for a new Legacy product, a “dual layer” bandage called Impax.

Marketing materials for the two products use identical photographs and similar language. The company describes both products as providing “optimal wound covering and protection during the treatment of wounds.”

Since 2022, spending on Zenith and Impax has exceeded $2.6 billion, according to Early Read’s analysis.

. . .

A cottage industry of doctors and nurses make house calls to treat wounds. Some skin substitute companies pitch themselves to wound care doctors by offering a cut of the rising bandage prices.

Dr. Caroline Fife, a wound care doctor from Texas who often writes about industry excesses, shared on her blog last year an email she received from an undisclosed skin substitute company. The company boasted that other doctors had developed “a healthy revenue stream” from its bandages and that a patch smaller than a credit card “would generate a little over $20,000 for your practice.”

Some companies offer doctors a “bulk discount” of up to 45 percent, according to doctor interviews and contracts reviewed by The Times. But doctors then collect a Medicare reimbursement for the full price of the product.

For the full story, see:

Sarah Kliff and Katie Thomas. “‘Skin’ Bandages Cost Medicare, And Doctors Get a Cut of Billions.” The New York Times, First Section. (Sun., April 13, 2025): 1 & 19.

(Note: ellipses added.)

(Note: the online version was updated April 14, 2025, and has the title “Medicare Bleeds Billions on Pricey Bandages, and Doctors Get a Cut.”)

The article by William Baumol praised in my initial comments is:

Baumol, William J. “Entrepreneurship: Productive, Unproductive, and Destructive.” The Journal of Political Economy 98, no. 5, Part 1 (Oct. 1990): 893-921.

The article by Susan Feigenbaum praised in my initial comments is:

Feigenbaum, Susan. “Body Shop’ Economics: What’s Good for Our Cars May Be Good for Our Health.” Regulation 15, no. 4 (Fall 1992): 25-31.

Croatian Government Does Not Learn from Distant Past (or Recent Past) That Price Controls Do Not Work

In Croatia, as in the United States, inflation resulted when each government “flooded the country with cash” to buy votes during the Covid pandemic.

(p. 4) In 301 A.D., the Emperor Diocletian made a bold but ultimately unsuccessful bid to address the inflation that was rampaging across the eastern half of the divided Roman Empire.

Prices of everything from purple thread and feathers to slaves and cattle were dictated by his Edict on Maximum Prices. Violators faced the death penalty. Diocletian gave up power about four years after issuing his edict, watching his measure fail from his sprawling retirement palace in the heart of what became the city of Split in Croatia.

Now Croatia’s government is trying a similar tactic to rein in prices that have soared in recent years and sparked protests and retail boycotts by the country’s beleaguered consumers.

. . .

The rules that came into effect this month are the Croatian government’s third attempt at controlling prices by fiat since September 2022. The first two efforts were largely ineffective, with retailers simply refusing to stock most price-controlled goods.

. . .

Economists blame the increases on a three-headed hydra of pandemic-era economic rescue packages that flooded the country with cash, increases in public sector wages and retailers rounding up prices after Croatia adopted the euro in 2023.

. . .

John H. Cochrane, an economist and fellow at the Hoover Institution, a research center, pointed to the role Diocletian’s edict played in causing shortages and fueling a black market.

“It’s like trying to stem the symptoms rather than treating the underlying disease,” Mr. Cochrane said of price controls. “It offers people the appearance of help for a while, and then it takes a few weeks or, a month or two, for all the problems to break out.”

For the full story, see:

Joe Orovic. “A Croatian Plan to Rein In Prices Echoes the Tack of an Emperor.” The New York Times, First Section. (Sun., March 9, 2025): 4.

(Note: ellipses added.)

(Note: the online version was updated March 10, 2025, and has the title “Echoing a Roman Emperor, Croatia Tries to Cap Soaring Prices.” Where there is a slight difference in wording, the passages quoted above follow the online version.)

“Republicans in Congress Have Embarked on a Spree of Deregulation”

If Trump achieves a new Golden Age it will be through his “spree of deregulation” (as the NYT labels it), not through his tariffs.

(p. 24) As President Trump moves unilaterally to slash the federal bureaucracy and upend longstanding policies, Republicans in Congress have embarked on a spree of deregulation, using an obscure law to quietly but steadily chip away at Biden-era rules they say are hurting businesses and consumers.

In recent weeks, the G.O.P. has pushed through a flurry of legislation to cancel regulations on matters large and small, from oversight of firms that emit toxic pollutants to energy efficiency requirements for walk-in freezers and water heaters.

To do so, they are employing a little-known 1996 law, the Congressional Review Act, that allows lawmakers to reverse recently adopted federal regulations with a simple majority vote in both chambers. It is a strategy they used in 2017 during Mr. Trump’s first term and are leaning on again . . .

. . .

Because resolutions of disapproval under the Congressional Review Act need only a majority vote, they are some of the only legislation that can avoid a filibuster in the Senate. This allows them to circumvent the partisan gridlock that stands in the way of most significant bills.

So far this year, Mr. Trump has signed three such measures: one overturning Biden-era regulations on cryptocurrency brokers, another canceling fees on methane emissions and a third doing away with additional environmental assessments for prospective offshore oil and gas developers. Another five, including one that eliminates a $5 cap on bank overdraft fees, have cleared Congress and await Mr. Trump’s signature.

That is a much slower pace than eight years ago, when Republicans erased 13 Obama administration rules within Mr. Trump’s first 100 days in office. Before then, the law had been successfully used only once, when President George W. Bush reversed a Clinton-era ergonomics rule.

Now Republicans are trying to go much further with the law, including using it to effectively attack state regulations blessed by the federal government. The House this week passed three disapproval resolutions that would eliminate California’s strict air pollution standards for trucks and cars by rejecting waivers from the Environmental Protection Agency that allowed them to take effect.

. . .

Republicans, . . ., argue that the scope of their review prerogatives should not be determined by unelected bureaucrats.

“It’s members of Congress — not the G.A.O., not the parliamentarian — who decides how we proceed under the C.R.A.,” Representative Chip Roy, Republican of Texas, said in a speech on the House floor.

For the full story, see:

Maya C. Miller. “Republicans Use an Obscure Statute to Roll Back Biden-Era Regulations.” The New York Times, First Section. (Sun., May 4, 2025): 24.

(Note: ellipses added.)

(Note: the online version has the date May 3, 2025, and has the title “Republicans in Congress Use Obscure Law to Roll Back Biden-Era Regulations.” The online version says that the print version of the article in the New York edition was on p. 20 of the First Section. But in my National edition of the print version the article was on p. 24 of the First Section.)

Ramaswamy “Mapped Out” Plan to “Dismantle Much of the Federal Government”

If you choose to submit a suggestion to the deregulatory “suggestion box,” you need to do so by May 12, 2025 for the suggestion to be considered. I apologize for not getting this information out earlier–I only read yesterday the article quoted below.

(p. A1) . . . at the Federal Communications Commission, which regulates radio and television broadcasting and satellite communications, President Trump’s appointees published a seemingly exuberant notice asking for suggestions on which rules to get rid of, titled “DELETE, DELETE, DELETE.”

Across the more than 400 federal agencies that regulate almost every aspect of American life, from flying in airplanes to processing poultry, Mr. Trump’s appointees are working with the Department of Government Efficiency, the cost-cutting initiative headed by Elon Musk and also called DOGE, to launch a sweeping new phase in their quest to dismantle much of the federal government: deregulation on a mass scale.

Usually, the legal process of repealing federal regulations takes years — and rules erased by one administration can be restored by another. But after chafing at that system during his first term and watching President Joseph R. Biden Jr. enact scores of new rules pushed by the left, Mr. Trump has (p. A17) marshaled a strategy for a dramatic do-over designed to kill regulations swiftly and permanently.

At Mr. Trump’s direction, agency officials are compiling the regulations they have tagged for the ash heap, racing to meet a deadline next week after which the White House will build its master list to guide what the president called the “deconstruction of the overbearing and burdensome administrative state.”

The approach, overseen by Russell T. Vought, the director of the White House Office of Management and Budget, rests on a set of novel legal strategies in which the administration intends to simply repeal or just stop enforcing regulations that have historically taken years to undo, according to people familiar with the plans. The White House theory relies on Supreme Court decisions — some recent and at least one from the 1980s — that they believe give them the basis for sweeping change.

. . .

The specifics of the new approach coalesced in the days after the election, when Mr. Musk teamed with Vivek Ramaswamy, the Trump ally who co-founded the Department of Government Efficiency. As Mr. Musk pushed the DOGE team to quickly fire workers and eliminate government offices, Mr. Ramaswamy mapped out a more detailed plan to use a pair of recent Supreme Court rulings to seek out old regulations that, under the new decisions, could now be legally vulnerable.

One of those rulings, in 2022, limited the Environmental Protection Agency’s ability to regulate carbon emissions from power plants. The other, in 2024, ended a precedent known as Chevron deference in which federal agencies were given wide legal latitude to interpret laws.

Together, the Supreme Court’s actions served to limit the broad regulatory authority of federal agencies, and Mr. Ramaswamy asserted that they could justify permanently erasing many rules that had been adopted before those precedents.

The mission has gained steam since the inauguration under the direction of Mr. Vought, who took over the planning after Mr. Ramaswamy left the Department of Government Efficiency to run for Ohio governor.

Mr. Trump ordered agency heads in February to work with DOGE teams to identify rules that impede technological innovation, energy production, and private enterprise and entrepreneurship, among other issues, giving them a 60-day window to prepare their target lists.

Mr. Musk, meanwhile, developed an artificial intelligence tool intended to comb through the 100,000-plus pages of the Code of Federal Regulations and identify rules that are outdated or legally vulnerable in the wake of the two Supreme Court decisions, according to two people familiar with the matter. It is not yet clear whether the tool has succeeded in its assignment, one of the people said.

. . .

Mr. Vought is seeking public input. He posted a call for ideas on the Federal Register, the government portal where the public can comment on proposed regulatory changes, adding a deregulatory “suggestion box.”