Scott Sumner lists seven examples of nutty American regulations where the entirety of the thinking class says they’re nuts, the entirety of the political class thinks they’re great, and the media stays out because they can’t get experts disagreeing with each other.
Alex Tabarrok has a post discussing the laws protecting auto dealers from competition. One thing I notice is that when I discuss this sort of crazy law in the faculty dining room, many non-economists will tell me that they have never even heard of the regulation. On the other hand the non-economists do tend to be familiar with other ongoing policy debates, say the minimum wage issue or the Keystone pipeline. Off the top of my head here are a few other examples of nutty regulations that people tend to be unaware of:1. Federal coastal flood insurance.
2. Zoning laws forcing the construction of parking lots
3. Restrictions on taxi medallions
4. Quotas on sugar imports
5. Huge urban/rural water price differentials
6. Restrictions of the ability of foreign air carriers to serve US markets
7. Occupational licensing restrictions where there is no public policy purposeThere must be 1000s of nutty regulations like the ones cited above. Many people don’t know about these regulations, even well educated people. Why not?In my view the basic problem is that the regulations are so obviously nutty that you can’t find any respectably pundit to defend them. Who would defend the auto dealer cartel except the auto dealers themselves? (Alex says the NYT does, but let’s assume that was temporary insanity on their part.) Because they are regulations, you might expect support on the left. But as a general rule even people on the left don’t support government regulations that have neither an efficiency nor an equity justification.
I love that New Zealand has relatively little of this. Let’s go through the list:
- EQC does not scale premiums by natural hazard risk, so we’re bad on this one too. We should fix it. There’s argument for keeping some subsidy going to the high risk properties so that we avoid the bailout risk of having a bunch of folks priced out of the insurance market, but that’s not an argument for zero risk-adjustment.
- We’re bad on this one too. The Greens’ Julie Anne Getner has been doing great work trying to do away with legislative parking minima; hopefully she’ll get some traction on it.
- We do not have the same kind of taxi cartel that New York has, but the regs on cab companies remain pretty restrictive. Hopefully Uber will show the way.
- Nah, we don’t do that.
- We have something of the opposite problem. While rural irrigators rightly have to go through a consenting process (and while we’d do better to have proper water markets instead), urban consumption is generally not priced. We have water meters, but they’re only checked to see whether you might have a leak on your property. Metered priced urban water would be a useful policy here: make it quasi-neutral by cutting baseline property taxes by the cost of the average household’s water consumption under the price scheme.
- Nah, we don’t do that.
- Nah, we mostly don’t do that. But it’s an area for continued vigilance.