Critiques of Regulatory Policy
Regulatory Successes
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FDA since 1900
Environmental regulation
 Through the 1980s
Workplace safety
Civil rights
Banking
 Sort of - lots of moral hazard problems
Regulations that Did Not Work so Well
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Airline rates and routes
Trucking rates and routes
Telecommunications
Who wins and who loses in economic
regulations?
 Small towns and rural areas?
 Unions?
 Big business?
Are We Better Off?
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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?
Why Doesn't the Public Trust Agencies?
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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?
Cost Benefit Analysis
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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
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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?
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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?
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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?
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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?
FDA
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Drug lag?
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?
Why not let the market sort it out?
Health Care as a Regulated Industry
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What are the problems facing health care in the
US?
 What has happened to nature of disease over
the past 100 years?
 How does this complicate health care policy?
 What does this tell us about the Charity
Hospital system?
What are the financial incentives in health care?
How is Ethanol a Regulatory Problem?
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Would anyone burn ethanol as motor fuel without
government subsidizes?
What is the policy basis for pushing ethanol?
What are the political issues?
What are the downsides of ethanol?
Is this a wise regulatory choice?
Stopped here
Should We Control Personal Risk
Decisions?
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Should consumers have the right to use unapproved
drugs?
 What if they are dying?
What about not getting their kids vaccinated?
Smoking?
 Smoking dope?
Being fat?
Regulatory Alternatives
Economic Incentives and Taxes for
Environmental Risks
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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?
Non-Agency Regulation: Tort and
Compensation Law
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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?
CBA - Federal Flood Insurance
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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?
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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?
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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?
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Should we bail them out when they do not buy
insurance?
How much do you want to pay?
What about coastal erosion and
subsidence?
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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?