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Explore the successes and failures of regulatory policies in areas such as pollution, health, income disparities, and workplace safety. Understand why the public distrusts agencies and the impact of this distrust. Examine the role of cost-benefit analysis and the trade-offs in decision-making. Learn about important court cases and their impact on regulatory policy.
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Are We Better Off? • What has improved over the past 50 years? • Pollution? • Health? • Racism? • Do more people have more stuff? • What does it mean to be poor in the US over the past 50 years? • What has gotten worse? • Income disparities? • Role of expectations?
Regulatory Successes • Food and drugs • Environmental regulation • Through the 1980s • Workplace safety • Civil rights • Banking • Sort of - lots of moral hazard problems
Regulations that Did Not Work so Well • Airline rates and routes • Medical care? • Trucking rates and routes • Telecommunications • Who wins and who loses in economic regulations? • Small towns and rural areas? • Unions? • Big business?
Why Doesn't the Public Trust Agencies? • What are examples of public distrust of agencies? • Are these justified? • What is the impact of this distrust? • Why don't people want to pay taxes? • How do the politics shift for national security? • What does Ron Paul say?
How Do We Make Political Choices? • Response to a crisis • Can work for specific narrow issues • Tends to not consider unintended consequences • Driven by lobbyists • Works best when it is not publically vetted • Think tax code • Cost-Benefit decisionmaking
Cost Benefit Analysis • How much should we spend to save a life? • Why does Congress refuse to put a price on human life? • Why does this make CBA more difficult? • How much to prevent injury? • How much should personal responsibility matter? • personal protective gear?
CBA Costs - Tables from Saving Lives: A Review of the Record • What is the problem with lives saved analysis? • Are they the same lives for different risks? • What about disability? • What are the most cost effective regulations? • Interesting that vaccinations and clean drinking water are not here • What are the most costly regulations?
Could We Spend the Money More Wisely? • What type of risks do we spend the most on with the least return? • Asbestos abatement of stable asbestos in buildings • Superfund risks • Overstated health risks - LA cancer corridor • What risks get the least attention? • Smoking? • Immunizations? • Primary care?
What is the Cost of Unemployment? • Economic costs to the individual • Lost opportunities for your children • Loss of assets, making recovery harder • Health costs • Stress • Reduced access to care • Self-esteem • Crime
Should we do CBA at All? • Why not prevent all possible risks? • Precautionary principle • What are the trade offs? • How does the US concern with risks affect our cost of business production? • When can preventing one risk cause another? • Natural pesticides • Smaller, lighter cars • More expensive power?
Where does the Court Stand on Requiring CBA? The OSHA Cases
The OSHA Statute • "The Secretary, in promulgating standards dealing with toxic materials or harmful physical agents under this subsection, shall set the standard which most adequately assures, to the extent feasible, on the basis of the best available evidence, that no employee will suffer material impairment of health or functional capacity even if such employee has regular exposure to the hazard dealt with by such standard for the period of his working life. Development of standards under this subsection shall be based upon research, demonstrations, experiments, and such other information as may be appropriate. In addition to the attainment of the highest degree of health and safety protection for the employee, other considerations shall be the latest available scientific data in the field, the feasibility of the standards, and experience gained under this and other health and safety laws."
AFL-CIO v. API, 448 U.S. 607 (1980)The Benzene Case • Wherever the toxic material to be regulated is a carcinogen, the Secretary has taken the position that no safe exposure level can be determined and that § 6 (b)(5) requires him to set an exposure limit at the lowest technologically feasible level that will not impair the viability of the industries regulated. In this case, after having determined that there is a causal connection between benzene and leukemia (a cancer of the white blood cells), the Secretary set an exposure limit on airborne concentrations of benzene of one part benzene per million parts of air (1 ppm), regulated dermal and eye contact with solutions containing benzene, and imposed complex monitoring and medical testing requirements on employers whose workplaces contain 0.5 ppm or more of benzene. 29 CFR §§ 1910.1028 (c), (e) (1979). • What did the API say was wrong with the proposed regulation?
American Textile Mfrs. Institute v. Donovan, 452 U.S. 490 (1981) - Cotton Dust • How does this standard differ from the Benzene Case? • Was there a determination about the economic impact of the regulation? • While this was a CBA, what did industry say was wrong with the analysis? • How did the court distinguish this from the Benzene Case?
FDA • What are the tradeoffs in FDA regulation? • Safety/Effectiveness • Should cost be part of the equation? • Why are consumers in a poor position to judge drugs? • Background Information? • Timeframe of action? • Comparison with other drugs? • What is drug lag? • Why not let the market sort it out? • What is the market mechanism - think Vioxx
Non-Agency Regulation: Tort and Compensation Law • How is tort law a regulatory process? • Is it a democratic process? • What is the public input? • Who protects the public's interest in tort cases? • What are the standards for scientific decisionmaking? • Breast implants? • Erin Brockovich? • What are the standards for CBA? • What if later evidence shows that the verdict or settlement was wrong?
Economic Incentives and Taxes for Environmental Risks • Tradeable permits for a fixed amount of pollution • Looks at total pollution or greenhouse gas, not process of control • Lets industry see who can do it the most efficiently • What if you are downwind? • Does an aggregate reduction, which benefits more people, make you any happier? • Carbon Tax • Goes to the heart of the CO2 program • What are the downsides?
CBA - Federal Flood Insurance • Should the feds provide flood insurance? • Why does it not work in the private market? • Why are the political pressures on the feds? • Do local communities really want accurate flood maps? • Do people really want accurate storm probability predictions? • Are the feds really going to charge accurate premiums? • What are the perverse incentives of the program?
CBA: Should We Rebuild New Orleans? • Would NO be in better or worse funding position if they had properly evacuated the folks before Katrina? • What is the CBA for real evacuations? • What is the CBA for rebuilding? • What are the trade-offs?
Who Should Pay? • Should folks in low risk areas subsidize the Big Easy lifestyle? • How about rebuilding rich folks houses on the Mississippi coast? • What about the responsibilities of the homeowners? • Should we bail them out when they do not buy insurance? • What message did Road Home send to people who did buy flood insurance?
What about coastal erosion and subsidence? • Should we rebuild homes before it is safe? • If we do not rebuild, what happens to the CBA? • Is coastal restoration justified by the CBA? • What does the CBA look like if it only slightly delays the loss of the coast? • How do you figure in the patronage value? • Would LSU Med be in NO if you did not include the patronage value?
