Wednesday, January 06, 2010

Quibble, I shall

Quoth Thomas Frank in The Wall Street Journal yesterday:

This was once a familiar line of criticism: Big business's sin was that it wasn't entrepreneurial enough. If given the opportunity, business would use government to form cartels and suppress competition. Free markets must thus be protected from the grasp of the corporate monster. The way to bring big business down is by deregulating even more.

If this sounds twisted and counter-intuitive, that's because it is. This is an argument that might have sounded good in 1979 but for it to make sense today one has to disregard the wreckage all around us courtesy of three decades of regulatory rollback.

Figures from the Law Librarians' Society of Washington, DC:

Total number of pages in the Federal Register as of 1979: 77,498
Total number of pages in the Federal Register as of 2004: 78,851

Yes, that number has gone down (to as low as 47,418 pages) and up (to as high as 87,012 pages) in the intervening years, but while there are multi-year trends within the narrative, there's no clear overall trend -- and the bottom line is that there were 1.7% more pages of federal regulations in 2004 (the last number LLS offers figures for) than in 1979. How do you get "three decades of regulatory rollback" from that?

Quantity versus quality of regulation is an obvious factor, but frankly (pun intended) I never see any argument or evidence attached to claims of overall "regulatory rollback."

For me, those claims always bring to mind California's great turn-of-the-century electricity "deregulation," which eliminated all sorts of controls ... but which was accompanied by one eensy-teensy little bit of new regulation. That one little item -- requiring utilities to buy their out-of-state power at the highest possible price in last-minute spot auctions instead of grabbing it cheap a month in advance -- drove prices through the roof and resulted in rolling blackouts/brownouts. Which, of course, were promptly blamed not on the idiotic regulation, but on the deregulation.

Anyway, that's my quibble with Thomas Frank. The rest of the piece is actually quite instructive and well worth reading. He smells a rat in the Republican Party's faux-populist marketing strategy. So do I.

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