Minimum Wage: The Long Game (Updated)

ECON 101: As the relevant time-horizon increases, so does the elasticity of demand.

Update. Well, as Glenn points out in the comments, we only had to wait a few more days for evidence to emerge against Seattle’s minimum wage.

When Seattle officials voted three years ago to incrementally boost the city’s minimum wage up to $15 an hour, they’d hoped to improve the lives of low-income workers. Yet according to a major new study that could force economists to reassess past research on the issue, the hike has had the opposite effect.

The city is gradually increasing the hourly minimum to $15 over several years. Already, though, some employers have not been able to afford the increased minimums. They’ve cut their payrolls, putting off new hiring, reducing hours or letting their workers go, the study found.

The costs to low-wage workers in Seattle outweighed the benefits by a ratio of three to one, according to the study, conducted by a group of economists at the University of Washington who were commissioned by the city. The study, published as a working paper Monday by the National Bureau of Economic Research, has not yet been peer reviewed.

Yeah, I’m not sure it’s literally true that the paper ‘has not yet been peer reviewed.’ NBER is the most prestigious working paper series in economics, and although I don’t know for sure, I would guess that they do peer review their papers. That at least has been my personal experience with less prestigious working paper series. In any event, NBER does not publish crap, and this study is in fact state of the art.

[W]hile employment overall did not change, that was because employers replaced low-paying jobs with high-paying jobs. The number of workers making over $19 an hour increased abruptly, while the number making less than that amount declined, Vigdor and his colleagues found.

Vigdor said that restaurateurs in Seattle — along with other employers — responded to the minimum wage by hiring more skilled and experienced workers, who might be able to produce more revenue for their firms in the same amount of time.

That hypothesis has worrisome implications for less skilled workers. While there those with more ability might be paid more, junior workers might be losing an opportunity to work their way up. “Basically, what we’re doing is we’re removing the bottom rung of the ladder,” Vigdor said.

This result explains the seeming paradox of why Big Labor devotes enormous resources to lobbying in favor of increasing the minimum wage when unionized workers already earn far more than the minimum. Since wages of union members are not directly constrained by the legal minimum, why should Big Labor be so concerned with raising the wages of others? The answer is that, in accordance with the results of the aforementioned study, a higher minimum wage gives employers the incentive to replace a number of unskilled workers with a smaller number of skilled workers. This increases the demand for skilled workers, increasing their wages and job security, at the expense of unskilled workers.

The minimum wage hurts precisely those people it is supposedly intended to help. That’s because helping the poor is never the real motivation for imposing a minimum wage. That’s just the excuse used to obscure the real–and far less noble–motive.

The Death of Inland California: Exaggerated?

Joel Kotkin likes to write about how the social and political elites in Coastal California are screwing over the inland part of the state, and his articles usually contain much truth and insight. In a recent piece, he returns to this theme in somewhat florid rhetorical terms.

California may never secede, or divide into different states, but it has effectively split into entities that could not be more different. On one side is the much-celebrated, post-industrial, coastal California, beneficiary of both the Tech Boom 2.0 and a relentlessly inflating property market. The other California, located in the state’s interior, is still tied to basic industries like homebuilding, manufacturing, energy and agriculture. It is populated largely by working- and middle-class people who, overall, earn roughly half that of those on the coast.

Fresno, Bakersfield, Ontario and San Bernardino are rapidly becoming the Bantustans — the impoverished areas designed for Africans under the racist South African regime — in California’s geographic apartheid. Poverty rates in the Central Valley and Inland Empire reach over a third of the population, well above the share in the Bay Area. By some estimates, rural California counties suffer the highest unemployment rate in the country; six of the 10 metropolitan areas in the country with the highest percentage of jobless are located in the central and eastern parts of the state. The interior counties — from San Bernardino to Merced — also suffer the worst health conditions in the state.

Just a couple paragraphs later, however, Kotkin unwittingly contradicts this narrative that the Inland Empire has been declining economically.

Between 2000 and 2013, the Inland region experienced a 91 percent jump in its population with bachelor’s degrees or higher, a far more rapid increase than either Orange or Los Angeles counties.

By curtailing new housing supply, California is systematically shutting off this aspirational migration. Chapman University forecaster James Doti notes that, in large part due to regulation, Inland Empire housing prices have jumped 80 percent since 2009 — almost twice the rate for Orange County.

I have no doubt that housing prices are higher than they should be due to regulation, particularly restrictions on land use and development. So the housing price situation is not ideal. But let’s step back and consider what rapidly rising housing prices imply about the Inland economy. If the economy were really in a tailspin, housing prices would not be rising, they would be falling or at least failing to keep up with the rise in other regions. But that’s not the case; Kotkin says Inland prices have experienced a more rapid rate of increase than at least some prominent parts of the coastal region.

Also the huge jump in the population with bachelor’s degrees is not indicative of economic decline, and on this metric Kotkin again notes that the rate of increase exceeds that for key coastal counties.

Kotkin’s reporting makes me think the death of the Inland Empire has been greatly exaggerated. The region undoubtedly trails the coast by most social and economic metrics, but that has always been true. Bakersfield in (say) the 1970s was not some kind of economic paradise.

Regulation Hurts the Little Guy

During Judge Gorsuch’s recent confirmation hearing, Democrat Senators expressed concern that Gorsuch did not display sufficient sympathy for ‘the little guy.’ If these Senators are really concerned about the little guy, however, why do they continue to support and expand the massive regulatory state that keeps the little guy down?

The fact is that regulation typically hurts the little guy. Regulation does this by raising the prices of goods and services. Sometimes regulation raises prices by stifling competition. Classic examples include telephone service and airlines prior to the 1980s. Regulation also raises prices by banning cheap versions of a good, often in the name of safety, leaving the consumer no choice other than a more expensive version.

This phenomenon was on vivid display when I visited Mexico a couple of years ago. In Mexico, the most common car on the road is the Nissan Tsuru, which is almost identical to the “B13” Nissan Sentra that was sold in the United States from 1991 through 1994. At first, I thought all those Sentras on the road were remarkably well-preserved specimens from over 20 years ago. But in fact, the B13 Sentra is still produced in Mexico to this day. Until 2011, it was the best-selling car in Mexico.

Nearly all Taxis in Cancun are Nissan Tsurus (B13 Sentras).

The appeal of the B13 Sentra is that it is pretty reliable, but most of all it is cheap. The car sells brand new for only about $7,000 or $8,000. Of course the car is very basic; you roll down the window yourself, and the car does not offer the most modern safety features such as side air bags or anti-lock brakes. Allegedly for safety reasons, the car cannot therefore legally be sold in the United States. A B13 Sentra purchased in Mexico also cannot legally be imported or registered in the United States.

Many Americans might like to have the opportunity to buy a brand new car for less than $8,000. Those people would typically be of modest means. You know, the little guy. But the government says, no, the car is not sufficiently safe.

Of course, the B13 Sentra was safe enough in 1994, but the government has since moved the goal post. And some people in the U.S. today are still driving B13s from the 1990s that are grandfathered.

More to the point, shouldn’t a free-born citizen get to decide how much safety he or she wants to purchase? In other contexts, people are perfectly free, as they should be, to take risks. For instance, some people like to go snowmobiling. Others increase their risk by taking a job on an Alaskan crab boat. Still others take their lives in their hands by following the government’s dietary guidelines. What sense does it make that a free-born person can choose to climb Mount Everest, but cannot choose to drive a B13 Sentra?

And now government regulation has finally caught up with the B13 even in Mexico. Nissan will be forced to halt production in May.

[Y]ou will no longer be able to buy a 25-year-old Sentra brand new anymore. And it’s all because of the meddling government.

Mexico recently passed new safety regulations, and without airbags or anti-lock brakes, those requirements spell doom for the Nissan Tsuru.

So farewell, B13 Nissan Sentra. You had a good 25-year run, and we will always remember you fondly. When you get to where you’re going, say hello to the original Volkswagen Beetle for us!

The safety regulations don’t just violate principles of liberty, they hurt the poor economically by adding several thousand dollars to the price of a car. The case of the B13 Sentra is instructive because it reveals just how cheap cars might be if not for government regulation.

The phenomenon is a general one; regulation almost always has the effect of increasing prices not decreasing them. For instance, one of the main reasons why health insurance is so expensive is due to regulations that mandate what the insurance must cover. State-level regulations require health plans to cover things that people don’t want or don’t need, like psychiatric treatment or post-natal care. The government effectively bans people from purchasing a cheap bare-bones plan. Instead of letting citizens decide for themselves, the government forces people to buy more health insurance than they want.

Rich people can easily afford the higher prices imposed by regulations. But for the poor, the cumulative effect of higher prices significantly degrades their standard of living.

I once had the misfortune of having lunch with someone who was a big fan of regulation. She was telling me the whole time how great regulation is for ‘consumers.’ She voted for Ralph Nader. Oh, and not so incidentally, she was rich.

The Most Irrational Law in America

The most irrational law in America might be…wait for it…The Endangered Species Act. Some people believe that ESA violates the rights of more Americans on a day to day basis than any other law on the books. You can have much of your life savings invested in land, and then some bureaucrat shows up and says you can’t use your own land because of an endangered rodent or toad. Most recently, the law was enforced against landowners even though the critter did not even live on the land in question.

A federal appeals court declined to rehear a case brought against the U.S. Fish and Wildlife Service (FWS) for designating private property as critical habitat for an endangered frog that hasn’t lived on those lands for decades.

FWS officials designated 6,477 acres as critical habitat for the endangered dusky gopher frog in 2012. About 1,500 acres of the critical habitat was private land in St. Tammany Parish, despite the fact no frogs had been spotted there for decades.

Landowners sued, but were rebuffed by federal circuit court judges in June. They appealed their case, arguing the government can’t designate land as critical habitat for an endangered species that doesn’t even live there.

In an 8-to-6 decision, judges declined to rehear the case. But lawyers representing the landowners said they planned on taking the case to the U.S. Supreme Court.

The ESA actually hurts endangered species as well by undermining the incentive of landowners to protect wildlife. If the legal sanctions weren’t so draconian, many landowners might be persuaded to work with conservationists to protect endangered species. But because the law is so unreasoning and punitive, landowners have the incentive to go scorched earth. If you find a nest of a kangaroo rat, the incentive is not to preserve it, but to burn it quickly before the authorities find out and take control of your land.

Brian Seasholes, an ESA expert, said the current way the government designates critical habitats ends up hurting more species than it helps.

“Ironically, this decision will most likely end up harming the dusky gopher frog and many other endangered and at-risk species by causing more landowners take actions to avoid the Endangered Species Act’s draconian penalties,” Seasholes told TheDCNF.

Seasholes said landowners have taken drastic actions to keep endangered species off their lands, “including ‘scorched earth’ (destroying habitat), ‘shoot, shovel and shut-up’ (killing species), going silent, denying researchers and government personnel access to their land, and refusing to become involved in species conservation efforts.”

Furthermore, I confess that I don’t even understand the point of the Endangered Species Act. In all seriousness, what is the point of this law? Ostensibly it is to prevent species extinction, but extinction has always occurred since the beginning of life on Earth. Something like 99 percent of all the species that ever lived are extinct. Life on Earth is in a constant state of flux, with old species being replaced by new. To stop species extinction is simply not possible. So why even try?

Environmentalists argue that human activity has caused a dramatic increase in the rate of extinction. But the fact is that nobody really knows how much higher the extinction rate is now compared to the rate that prevailed prior to human civilization.

Some environmentalists claim that tens of thousands of species are going extinct every year.

In 1979, Berkeley ecologist Norman Myers published a book called “The Sinking Ark,” which claimed 40,000 species were disappearing each year. The next decade, a biologist who worked for the World Wildlife Fund predicted up to 20 percent of all species would disappear by the turn of the millennium. That didn’t happen, but the drumbeat of alarms continues: A much-publicized paper in 2004 warned that by 2050, climate change could put 1 million species at risk of extinction.

Stuart Pimm … published a paper this summer warning that species are currently dying off at 1,000 times the rate they were before the human era, and in the future are likely to perish at 10,000 times that rate.

These numbers, however, are just guesses and not based on documented extinctions. The amount of documented extinctions is comparatively tiny.

The International Union for Conservation of Nature, which keeps the most definitive list of extinct and threatened species, has counted just over 800 total confirmed animal extinctions since the year 1600.

So that’s an average of about two per year, not tens of thousands. And these are extinctions due to all causes, not just human activity. The late economist Julian Simon noted the following excerpt from a 1992 book written by two ecologists.

[F]orests of the eastern United States were
reduced over two centuries to fragments totalling 1-2% of their original extent…during this destruction, only three forest birds went extinct — the Carolina parakeet … the ivory-billed woodpecker … and the passenger pigeon …. Although deforestation certainly
contributed to the decline of all three species, it was probably not critical for the pigeon or the parakeet (Greenway, 1967). Why, then, would one predict massive extinction from similar destruction of tropical forest?
(Simberloff, 1992, p. 85)

Closer examination of the existing data on both well-and little-known groups, however, supports the affirmation that little or no species extinction has yet occurred (though some may be in very fragile persistence) in the Atlantic forests. Indeed, an appreciable
number of species considered extinct 20 years ago, including several birds and six butterflies, have been rediscovered more recently. (Brown and Brown, 1992, p.

So 200 years of destruction and absolute devastation of the virgin forests of the eastern U.S. caused between one and three bird extinctions. That’s it.

Scientists don’t even know how many total species exist, as estimates range widely from 2 million to as many as 100 million. The claims of high extinction numbers are based on assumed species number near the high end of the range.

There’s a sense in which the big numbers, however, tend to work against the conservation argument. If there are 100 million species, and a huge number go extinct due to natural causes, why should humans bear significant costs in order to save just a few species here and there? Why should one frog make thousands of acres off limits to humans? Especially since that frog might be unlikely to survive the next glacial period, a few thousand years from now. Why should the timber industry be devastated because of the spotted owl?

And in any event, if we do care about insuring that these species do not disappear forever, we have the ability and technology to preserve their genetic line even if they can no longer live in the wild.

Don’t get me wrong; I like animals, and I’d be genuinely bummed if, say, rhinos or lions went extinct. I’m sure millions of other people feel the same way, and for that reason, it would be desirable to expend considerable resources to protect them.

The other consideration is how important the species might be to the broader ecosystem. So for instance, plankton dying out would be catastrophic because it would threaten whales and other marine animals.

It seems pretty clear, however, that trying to preserve any and every species with little or no regard to cost makes no sense. Yet that is essentially the mandate of the ESA, perhaps the most irrational law on the books.

Bureaucrats Butthurt over Regulatory Repeal

As we reported a couple of weeks ago, Congress recently revived a dormant law–the Congressional Review Act of 1996–in order to repeal last-minute Obama regulations, including a so-called ‘stream protection rule’ that would have destroyed jobs in the coal industry. Well, now Politico reports that the bureaucrat who wrote the stream rule is all salty that his handiwork is getting flushed. Almost every line of the article is unintentionally hilarious.

Joe Pizarchik spent more than seven years working on a regulation to protect streams from mountaintop removal coal mining.

Ulysses S. Grant, while dying from cancer, wrote his two-volume memoirs in less than a year. Handel composed his Messiah in 24 days. This bureaucrat takes seven years to write a stupid stream regulation.

“My biggest disappointment is a majority in Congress ignored the will of the people,” said Pizarchik, who directed the Interior Department’s Office of Surface Mining Reclamation and Enforcement from 2009 through January.

Unlike Pizarchik, the members of Congress who nixed his rule were actually elected by the people.

Pizarchik and other former Obama administration officials called the rapid repeal process intensely unfair. The 1996 law says any repeal must come within 60 legislative days after a rule becomes final.

“If there had been more time and Congress had not rushed this through but had actually deliberated on what was in the rule, [then] the results would have been different,” Pizarchik said.

Yeah, no. Later in the article we learn that the GOP has opposed the stream rule since at least 2011. They had plenty of time for deliberation, and a little more time wouldn’t have changed their minds. Furthermore, if Pizarchik hadn’t taken seven years to write his rule, he could have had it enacted prior to the 60-day window, which would have made it immune to repeal.

[T]he swiftness has former Obama officials wondering if lawmakers even understood the regulations they voted to kill.

“I can’t venture to say that that many people, when they’re being honest, have actually read the rule,” said Brandi Colander, who was Interior’s deputy assistant secretary for land and minerals management before leaving in September for the National Wildlife Federation.

I’m guessing Brandi wasn’t complaining when Congress voted on Obamacare without reading it.

“I think that when cooler heads really can prevail and you push the politics to the side, we should really be asking ourselves, should we be able, with the stroke of a pen, without requiring people to read it and not even giving these rules a chance to see the light of day — is that actually good governance?” she added.

Apparently, Brandi’s idea of “good governance” is unelected bureaucrats imposing rules with the force of law while the elected representatives of the American people just STFU.

Teitz similarly argued that the Bureau of Land Management’s methane waste rule would have generated revenue for the energy industry, which could have sold the gas that the regulation would make it capture. But Republicans — backed by oil and gas companies — still made it a top target.

“People are looking for scalps,” she said. “‘It’s an Obama rule so let’s drag it down whether or not it’s actually costly to industry.’”

LOLZ. The bureaucrats would have us believe that they understand the industry’s interests better than the industry itself does. ‘Don’t those dummies know they can SELL the methane that we force them to capture!’

Before this year, the only time Congress successfully used the review act to repeal a regulation was in 2001, when it blocked the Labor Department’s Occupational Safety and Health Administration from enforcing an ergonomics rule intended to reduce the risk of musculoskeletal disorders in the workplace.

Sixteen years later, wounds are still open for some officials who helped write that rule…

Still butthurt after sixteen years!!

Jordan Barab, who had worked on the ergonomics rule, fought to save it when he moved to the AFL-CIO after the 2000 election.

Wait, this guy makes a regulation that benefits Big Labor, and then takes a job with…the AFL-CIO. And didn’t we just see above that the lady who did the environmental rule took a job with…the National Wildlife Federation? Gee, it’s almost as if they’re already working for the interest group while still on the government job.

Pizarchik is already working on ideas to write a new version of the stream rule under a future president, though he declined to share any details.

Presidents come and go, but the bureaucracy is eternal.

He also hinted someone could mount a constitutional challenge to the review act itself, which critics have long argued tramples on the separation of powers.

“I believe there’s a good chance that, in a legal challenge, that a court will overturn Congress’ actions here as an unconstitutional usurpation of the executive branch’s powers,” he said.

Who knows what some hack Democrat judge might someday decide, but only in a bizarro, anti-matter, parallel universe is it unconstitutional for laws to be written by the legislative branch rather than the executive.

Let’s Get this Party Started: Little-Used Law Lets Congress Kill Regulations

Kimberly Strassel of the Wall Street Journal has a fascinating report on the Congressional Review Act (CRA), a little-used 1996 law that leaves many regulations from the last 20 years vulnerable to permanent repeal by Congress.

Here’s how it works: It turns out that the first line of the CRA requires any federal agency promulgating a rule to submit a “report” on it to the House and Senate. The 60-day clock starts either when the rule is published or when Congress receives the report—whichever comes later.

“There was always intended to be consequences if agencies didn’t deliver these reports,” Mr. Gaziano tells me. “And while some Obama agencies may have been better at sending reports, others, through incompetence or spite, likely didn’t.” Bottom line: There are rules for which there are no reports. And if the Trump administration were now to submit those reports—for rules implemented long ago—Congress would be free to vote the regulations down.

“If they haven’t reported it to Congress, it can now be challenged,” says Paul Larkin, a senior legal research fellow at the Heritage Foundation. Mr. Larkin, also at Wednesday’s meeting, told me challenges could be leveled against any rule or guidance back to 1996, when the CRA was passed.

The best part? Once Congress overrides a rule, agencies cannot reissue it in “substantially the same form” unless specifically authorized by future legislation. The CRA can keep bad regs and guidance off the books even in future Democratic administrations—a far safer approach than if the Mr. Trump simply rescinded them.

The House already used the CRA this week to vote down several last-minute Obama regulations, including a Stream Protection Rule that would have imposed significant costs on the coal industry.

So far, the House has only voted to repeal regulations finalized within the last 60 Congressional working days, but it will be interesting to see if the House uses the CRA to tackle older regulations that are vulnerable to repeal because the relevant regulatory agency never submitted a report.

Killing the regulations also requires a vote of the Senate, but an advantage of the CRA is that Democrats would not be able to filibuster the vote.

The CRA offers a terrific opportunity and a clear test of whether the GOP is serious about rolling back the regulatory state.

The Mystery of Slow Growth

Economists have long been concerned with the ‘productivity slowdown,’ which refers to the fact that productivity growth since about the early 1970s has been significantly slower than it was during the 1950s and 1960s. During the past 15 years, productivity growth has been even slower. Economists don’t really understand the cause of the productivity slowdown, and view it as something of a puzzle. Speaking for myself, however, I feel a lot less puzzled when I see headlines like this.

A tiny unborn hummingbird is getting in the way of a big project at the Richmond-San Rafael Bridge.

The discovery of a nest and egg in a tree is stalling the start of upgrades on the bridge that connects the East Bay and North Bay, officials said Tuesday.

The species, Anna’s Hummingbird, is protected under the Migratory Bird Treaty Act that forbids the removal of the egg and offers other protections to birds.

The nest, about half the size of a fist, was discovered about a week ago when work was set to begin.

It was found on the Richmond side of the $70 million bridge project, in one of about two dozen trees that were to be removed to widen the freeway, officials said.

Under the protection act, the tree must stay put until the hummingbird baby is gone.

One egg the size of a marble holds up a $70 billion project. Can’t they just hatch the egg in a lab or something?

The productivity slowdown started in the early 1970s. The first Earth Day event was held in 1970, and the Environmental Protection Agency was created that same year. But maybe it’s all just a coincidence.

A couple of years ago, a made a visit to Pearl Harbor, Hawaii. Something I learned there was that the harbor could not serve as a deep-water port until the coral reef blocking the channel was removed. Demolition of the reef started in the first decade of the 20th century so that by 1912, battleships were finally able to enter the harbor.

If today’s environmental rules and sensibilities had existed in 1900, that reef would never have been removed, and Pearl Harbor would never have functioned as a deep-water port and would never have hosted a naval base. Honolulu might today be nothing more than a sleepy little village.

Exit question: How many radical environmentalists are currently living in Honolulu, with their lives there made possible by the existence of that port?

Economic Growth Now Below Average for Eleven Years in a Row

Last week the government’s Bureau of Economic Analysis released its latest report on U.S. Gross Domestic Product, the economy’s total output of goods and services. For calendar year 2016, the report showed that real GDP grew by an anemic 1.6%. Although further revisions might boost this figure a little bit, it’s certain that 2016 marked the eleventh straight year with growth below 3%. Three percent is the average that the economy has maintained, more or less, over the long-term, ever since we have had reliable data (going back to about 1880). Never before has the economy experienced so many consecutive years with growth under 3%. The previous post-War record was four years, which occurred from 1979 through 1982.

The record is especially troubling since the economy usually rebounds strongly for a few years following a deep recession, but that did not happen after the Great Recession of 2008-09. In the seven-and-a-half years since the recession ended in mid-2009, the economy has averaged only 2.1% growth. If the economy over that period had instead managed 3.0% growth–which is only mediocre, not good–the economy today would be larger by 6.8%. If household income were larger by that proportion, it would mean the median household would have an extra $4,000 per year.

As we noted previously, some economists think that actual growth is stronger than the official statistics reveal. But even after accounting for this possible bias in the statistics, actual growth is still not too impressive.

When it comes right down to it, nobody knows for sure the reason for the slow growth. But a prime suspect would have to be the relentless growth of the regulatory state. If President Trump is looking for an excuse to roll back federal regulations, eleven years of below-average growth is a pretty good justification.

On Rolling Back Government, GOP Talking Big

When it comes to rolling back the federal government, the GOP has been talking big lately.

Donald Trump is ready to take an ax to government spending.

Staffers for the Trump transition team have been meeting with career staff at the White House ahead of Friday’s presidential inauguration to outline their plans for shrinking the federal bureaucracy, The Hill has learned.

The changes they propose are dramatic.

The departments of Commerce and Energy would see major reductions in funding, with programs under their jurisdiction either being eliminated or transferred to other agencies. The departments of Transportation, Justice and State would see significant cuts and program eliminations.

The Corporation for Public Broadcasting would be privatized, while the National Endowment for the Arts and National Endowment for the Humanities would be eliminated entirely.

Overall, the blueprint being used by Trump’s team would reduce federal spending by $10.5 trillion over 10 years.

A trillion a year? I’d be gobsmacked if all this actually transpired. Does Trump really believe he can achieve all of it? Maybe he’d settle for less and this is just his opening offer to the Democrats.

Meanwhile, the GOP House has passed some very significant regulatory reforms. First, the REINS Act.

The Regulations from the Executive in Need of Scrutiny (REINS) Act would require any regulation which would have an economic impact of $100 million or more to pass Congress and be signed by the president. If the regulation failed to do so after 70 days, it would become null and void.

The REINS Act sounds like a huge step towards restoring Constitutional government, according to which laws are voted on by the people’s elected representatives in Congress, rather than imposed on the people by unelected bureaucrats in the executive branch.

REINS sounds great to me, but law scholar Richard Epstein has some objections to the ‘factual review’ provisions that are beyond my pay grade. Epstein likes better another bill that has been introduced in the House, the Separation of Powers Restoration Act (SOPRA).

Its key provision reads that any court reviewing administrative action shall “decide de novo all relevant questions of law, including the interpretation of constitutional and statutory provisions, and rules made by agencies.” “De novo” review means that the reviewing court gives no deference to the legal opinions of either the parties or lower court judges and administrators.

This compact and straightforward provision, which should be promptly enacted, takes aim at two of the most misguided decisions of administrative law that instructed courts to take a deferential stance toward agency actions interpreting the key statutes and regulations they administer. The first of these cases, Chevron USA Inc. v. NRDC (1984), written by Justice John Paul Stevens, insisted that in all ambiguous cases, reviewing courts should defer to an agency interpretation of its governing statute. Auer v. Robbins (1997), written by the late Justice Antonin Scalia, similarly held that for an agency’s “own regulations, [its] interpretation of it is, under our jurisprudence, controlling unless ‘plainly erroneous or inconsistent with the regulation.’”

Letting the courts smack down the bureaucrats’ interpretations of law sounds great to me. But one thing Epstein doesn’t mention is that none of these bills can get enough Senate votes to override a Democrat filibuster. There’s just no way they can become law in this Congress, and the House must know that very well. Which raises the question: if it can’t become law, then what’s the point? Political grandstanding?

Given that the GOP House knows the bill can’t become law, there’s no cost to the members in voting for it. Which also means there’s no evidence they really support the legislation. Passing a dead-end bill doesn’t prove they really mean it.

PLEASE Abolish a Cabinet-Level Department

Every time the media issues a report that President-elect Trump has chosen someone to serve as Secretary of Such-and-Such federal department, I am overcome with a profound feeling of disappointment. Instead of staffing these departments, they should be abolished. Indeed, the existence of most cabinet-level departments–Energy, Education, Agriculture, Veterans Affairs, HUD, Transportation, etc.–cannot be justified on economic grounds. All these federal departments do more harm than good.

At the Washington Examiner, Peter Z. Grossman, an economics professor at Butler University, makes the case against the Department of Energy in particular. As Grossman correctly notes, DOE was created during the Carter Administration, a time when people wrongly feared that the world was rapidly running out of fossil fuels.

The DOE was conceived in dark and pessimistic beliefs and forecasts that have proven totally wrong. As Obama might say, the DOE is on the wrong side of history. As it stands the department needs to either be rethought or retired.

The original legislation justified a Department of Energy because, 1) we were rapidly running out of fossil fuels, especially oil and natural gas; 2) as a consequence of this we were becoming increasingly dependent on energy imports — dependence that made us vulnerable to embargoes and political blackmail; and 3) so therefore we needed “a strong national [read government-directed] energy program.”

The hysteria that prevailed at that time was reflected in a full-page ad that appeared in the Wall Street Journal in 1978. The ad asserted that within 9 years, that is by 1987, the world would completely run out of oil. That’s right; we were supposed to be out of oil thirty years ago! Instead, proven oil reserves currently stand at an all-time high.

Even before fracking proved the dire warnings to be utterly wrong, we had for the most part taken care of our energy dependence. We significantly reduced any possible vulnerability to an embargo by diversifying our suppliers; over sixty countries were supplying us with oil in the 2000s. Our No. 1 supplier? Canada. Mexico also has been in the top five. This information makes “foreign oil,” a bit less scary, no?

So DOE was created to protect us from a threat that did not really exist. And in the meantime, it has racked up a legacy of failure and imposed costly mandates on Americans.

[W]e’ve endured wasteful, panicked policies such as massive subsidies for the wind and solar power, and electric cars. Worst of all, Congress has saddled consumers with ethanol subsidies and mandates. These boondoggles cost us billions of dollars, and none of them are [sic] commercially viable in their own right. In fact, the DOE has produced no dramatic breakthroughs in energy technology despite 40 years of trying (and failing) to pick winners.

Grossman correctly points out (as Milton Friedman did long ago) that DOE’s very few useful functions can easily be taken over by other departments.

Many would argue that the DOE does some good, even essential work. It watches over nuclear waste, for example. And there is some useful research and development going on at many of the DOE laboratories.

But any valuable work done by the DOE could be carved off into independent agencies just as the Federal Energy Regulatory Commission (FERC) was created by Congress so that the DOE would not have control over natural gas prices. Nuclear power concerns should be part of the Nuclear Regulatory Commission (NRC), and the labs could be placed under an independent agency such as the Energy Research and Development Agency (ERDA) that existed from 1974 until it was folded into the DOE three years later.

Grossman notes that Trump’s nominee for Energy Secretary, former Texas governor Rick Perry, actually advocated abolishing DOE when he ran for president in 2012. Let’s hope Perry still believes that, and that he intends to take over DOE so he can dismantle it. I’m not holding my breath, however.

Below, check out the interview from 1999 with the great Milton Friedman, age 86 at the time. Out of 14 cabinet-level departments, Milt argues for abolishing nine and a half of them. At this point I would consider it great progress if the Trump Administration managed to abolish just one of those nine-and-a-half.