Neo-liberals and the Office of Information and Regulatory Affairs (OIRA)

Cass Sunstein was appointed head of OIRA from 2009-2012 and led it to delay and eviscerate a host of environmental regulations.  Pres. Reagan created the office ostensibly to improve decision making by insisting on benefit-cost analysis of all rules, but industry used it to escape and delay regulation.  An example of its over-reaching and bizarre twists is to count lost pleasure from smoking as an off-set to health benefits of reduced smoking.  Besides, early death saves health care costs over the smokers' lifetime they claim! All of this is justified by the neo-liberal championing of what they call liberty-enhancement. If some want to kill themselves, they should be free to do so.  This is a neat trick that diverts blame from systemic corporate malfeasance to individuals. 
   This is documented in Robert Kuttner, "Obama's Obama" Harpers, December 2014." A must read by those interested in good government and avoidance of the siren song and paternalism of the neo-liberals. Obama does not come off well. Sunstein and Obama prove once again that smart and wise are not the same thing.

The Nanny State?

The FDA is considering phasing out trans fats as already banned by New York City, Philadelphia, and the state of California.  Rush Limbaugh groused that bureaucrats shouldn't regulate what people eat because it's none of their business. The no-nothings are crying about the "nanny state" that takes away freedom.  Whenever I hear the word "freedom" I ask whose freedom are we talking about.  I know that freedom for the pike is often death for the minnow.  The nanny state argument claims that if people want to eat unhealthily, it only harms consumers of hydrogenated oils.  NOT TRUE.  If peoples' diets make them unhealthy it raises the health insurance rates for everyone.  Further, if the people are on Medicare, it raises taxes to support their care. 
     Finally, some people know their weaknesses and call on the state to help them out in moments of weakness.  If they doubt their own resolve, they may favor prohibiting some foods that promise to taste good, but are unhealthy.  Of course, their freedom to be free of temptation is at the expense of those with dietary fortitude.  Alas, not everyone can be free if interests conflict.

Jobs

Johnny Cash sings a song in which he says “St. Peter don’t you call me, ‘cause I can’t go, I owe my soul to the company store.”  This thought now dominates popular thinking .  But why is it that jobs depend on capitalists any more than returns to capital depend on labor?  Did you ever try to build something with only dollar bills?  Confusion on this point leads to local governments subsidizing companies to locate in their jurisdictions to the extent that taxpayers give back much of their wages in taxes. And then they bitch about taxes.

It leads to Congressional representatives objecting to reduced military spending and base closing because it reduces local employment.  But the money would be spent for other goods providing equal employment.  Instead of subsidizing military production, we should help employers and employees by sharing the costs of transition.  Contrary to much economic thinking, reallocation of labor and capital is not costless and if it is not shared, political action freezes assets in old lines of production.

Symbiogenesis vs. Darwinism

Economics utilizes metaphors and ways of thinking from the natural sciences. Neo-Darwinism provides convenient support for the story of the beneficent outcome of something called free market competition. Darwinism holds that adaptations occur exclusively through random mutation that sometimes produces genes with useful attributes that give the organism an advantage in competition with other organisms. This view is being challenged by the research of Lynn Margulis, who observes that complexity at the level of the cell is not the result of lethal competition, but rather symbiotic relationships between gene sets.
Prof. Margulis argues that even new species occur over time when symbiotic partners fuse. She says, “we are all walking communities of bacteria.”
Consider what an economics built on both cooperation and competition would look like. Is it coincidence that my latest book is entitled, “Conflict and Cooperation.”

Free Market: What Can It Mean?

The New York Times editorial (Dec 30, 07) entitled “Free Market: A False Idol After all,” contains the following quote:
“Every regulation reduces people’s freedom,” said David R. Henderson, a libertarian economist at Stanford University’s Hoover Institution. “The more regulation we get, the worse we do.” Who is the “we” referred to here?
Pitting the free market vs. the non-free market is a misleading conception. All markets begin with a distribution of property rights to be exchanged. Regulations are simply somebody’s property right and opportunity, and somebody else’s exposure to that opportunity. For example, a workplace safety regulation simply says that workers own the right to be free of certain hazards. Henderson uses an undifferentiated “we” that ignores the fact that freedoms of people with different interests conflict. Or as Isaiah Berlin put it, “Freedom for the pike is death for the minnow.”
A safety regulation functions no differently than a land owner’s property right. It is an asset for a worker just as is his human capital made valuable by regulation of slavery. It is part of what is antecedent to market trading. It says who has what to trade. If you do not want to live in a world that is the outcome a particular set of property rights, change the rights and a different outcome will be forthcoming. The market is not the culprit— it is the fact that some people have all of the rights. You need not oppose free markets, rather oppose the particular rights that account for the performance you want to change. Rights get changed by legislation and by court rulings.

By the way, slave owners argued against the abolition of slavery as an offense against freedom. To be honest, they should have said that regulation of slavery reduced plantation owners’ freedom and enlarged the freedom of former slaves. It draws attention away from the real issues of the distribution of property rights to cast the choice as free market vs. regulation. The false idol is not the market, but the particular market rules that produce a particular performance of the economy.