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James Broughel

James Broughel



Articles by James Broughel

The Unlikely Story of American Regulatory Socialism

15 days ago

Abstract: The conventional wisdom has it that US Democrats and those on the American left support incremental steps in the direction of socialism, if not an all-out endorsement of the concept. However, in at least one area—regulation—Republicans and the American political right have also, albeit unwittingly, spread the seeds of socialism not just in Washington, …

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What Plato Can Teach Economists | Discourse

19 days ago

In Plato’s classic dialogue “Phaedo,” Socrates, in the moments leading up to his death, puts forward a series of arguments for why the soul is immortal. His conclusion is that the soul will outlive the body after a person perishes, and at the moment of death, the soul is liberated as it is freed from the needs and distractions of the body. The story can be thought of as forming part of a larger, often religious body of literature that makes a clear delineation between body and soul.
Modern economists take a different view. Much of the normative approach to economics—that is, the recommendations economists make that follow from studying economics and applying an economic lens to social problems—is about satisfying people’s

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Rehabilitating the Opportunity Cost of Capital in Cost–Benefit Analysis

September 21, 2021

For more than 40 years, the federal government has conducted cost–benefit analysis on the effects of regulations in an effort to ensure that they do more good than harm. However, consistent underestimation of the opportunity cost of capital (how invested resources would appreciate in value over time) has made it too easy for regulations to pass a cost–benefit test. In “Rehabilitating the Opportunity Cost of Capital in Cost–Benefit Analysis,” James Broughel examines the limitations of the two main approaches to calculating this opportunity cost and outlines an alternative way forward.
The Social Opportunity Cost Approach vs. the Social Time Preference Approach
• The social opportunity cost (SOC) approach uses a social discount rate to account for the opportunity cost of capital.
• The SOC

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How ‘Mortality Analysis’ Can Promote Equity for the Poor and Vulnerable

September 14, 2021

Last month, the Office of Management and Budget (OMB) released a "Study to Identify Methods to Assess Equity." The report was a response to an executive order aimed at advancing racial equity and supporting underserved communities. It tasked OMB with examining obstacles to public participation across the federal government, as well as identifying barriers inhibiting access to government programs. OMB’s report finds that administrative burdens such as applications, other paperwork, and time spent traveling to in-person meetings disparately impact the people who need access to federal services the most.Yet, absent from the report is one of the most consequential burdens that regulations can impose on Americans: increased risk of death. This seemingly controversial idea is a simple outgrowth

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A U.S. Sovereign Wealth Fund? | Discourse

July 20, 2021

Neither markets nor governments are perfect. Both can waste resources at times, and the ideal system of government should strive to counteract such waste. Sovereign wealth funds—state-owned investment funds that exist for the purpose of managing national (or subnational) savings—have unique characteristics that could help address the failings of both the private and public sectors. These funds could even dramatically change the way governments pay for themselves and the way citizens interact with their leaders as co-producers of policy, but to do so, the U.S. needs to be willing to experiment with different methods and modes of governance.
Market Failures
Market failures occur when mutually beneficial exchanges that would make

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Why Conservatives and Libertarians Should Think Globally About Environmental Policy

July 8, 2021

Economists are debating whether to take a domestic or international perspective on environmental … [+] policy.
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In recent years, an interesting debate has been taking place among economists. It centers around the appropriate scope of regulatory policy, with a particular emphasis on environmental regulation. Given the Biden Administration’s ambitious environmental goals, this debate may accelerate in the coming months and years.

The issue economists are grappling with is whether benefits that accrue to foreigners from U.S. policies should receive the same weight in an economic analysis as costs that fall primarily on Americans. This dilemma comes up most often in climate policy, but is relevant to many other areas of policy as well.
The question is ultimately one of

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How the Social Discount Rate Makes Regulatory Analysis Unsound

June 15, 2021

For several decades now, cost-benefit analysis (CBA) has been the primary analytical tool used by the federal government to evaluate regulations and their impacts. During that time, states also began to adopt CBA, as did governments around the world. While it is potentially a useful tool to guide decision-making, CBA suffers from shortcomings that in other contexts would be considered failures to apply basic economic principles.
By frequently ignoring the actual consequences of government policy, cost-benefit analysis today has little connection to the evidence-based tool that economists and legal scholars sold to the American public in the early 1980s. Fortunately, the Biden administration plans to revisit the guidance it gives to federal agencies on how to produce regulatory analysis,

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POLICY SPOTLIGHT: How the Social Discount Rate Makes Regulatory Analysis Unsound

June 15, 2021

Cost-benefit analysis (CBA) has been adopted by the US federal government in the past several decades as the primary analytical tool to evaluate regulations and their effects on societal well-being. The use of CBA eventually spread beyond Washington, DC, as both states and governments internationally began to adopt it.
While potentially a useful tool to guide decision-making, CBA, as applied, suffers from significant shortcomings. By frequently ignoring or underweighting the actual consequences of government policy, CBA today has little connection to the evidence-based tool as it was originally conceived. Fortunately, the Biden administration plans to revisit the instructions it gives to federal agencies on how to produce regulatory analysis, including CBA. Shoring up CBA’s problematic

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The EPA's Irrational, Uncompliant Benefit-Cost Analysis Requires Stronger Enforcement Mechanisms

June 14, 2021

The Environmental Protection Agency (EPA) is seeking comments on its interim final rule titled, “Rescinding the Rule on Increasing Consistency and Transparency in Considering Benefits and Costs in the Clean Air Act Rulemaking Process” (hereafter referred to as the interim final rule). The interim final rule will rescind a different final rule (hereafter referred to as the benefit-cost rule) enacted under the previous administration, which imposes certain benefit-cost analysis requirements on EPA regulations implemented under the Clean Air Act (CAA).
I appreciate the opportunity to submit this public comment on the interim final rule. The Fourth Branch Project at the Mercatus Center at George Mason University is dedicated to advancing knowledge about the effects of regulation on society. As

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The Interagency Working Group on the Social Cost of Greenhouse Gases Should Be Transparent About the Value Judgments Behind Its Estimates and Acknowledge Their Cost

June 11, 2021

The Office of Management and Budget (OMB) is seeking comments on behalf of the Interagency Working Group on the Social Cost of Greenhouse Gases (IWG) regarding a recent update made to estimates of the social cost of carbon, methane, and nitrous oxide in a technical support document (TSD) issued by the IWG. The IWG intends for federal regulatory agencies to use the values from the TSD in regulatory impact analyses to justify regulations targeting greenhouses gas emissions.
The Mercatus Center’s Fourth Branch project is dedicated to advancing knowledge about the effects of regulation on society. As part of its mission, scholars conduct careful and independent analyses that employ contemporary economic scholarship to assess regulations and their effects on economic opportunities and societal

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What Is vs. What Should Be In Climate Policy

April 22, 2021

The social cost of carbon (SCC) is a measure that describes the harm a ton of carbon dioxide (CO2) emissions has on society when it is emitted into the atmosphere. The SCC is perhaps most prominently used as an input in benefit-cost analysis, which is produced for many regulations, including those targeting CO2 emissions. The Biden administration recently updated its estimate of the SCC to $51 per ton, and the administration is expected to use this updated figure when determining how much society should spend implementing regulations and other policies targeting global warming.
Although calculating the SCC involves using complex models (known as integrated assessment models) that rely on scientific inputs as parameters, these calculations also contain certain value judgments that one who

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Constructing a Red Tape Reduction Executive Order

February 11, 2021

The term “red tape” describes outdated, unnecessary, or otherwise excessively burdensome regulations that do more harm than good. Whereas some regulations are justified, red tape imposes unnecessary costs on society, is often regressive, slows economic growth, and limits upward mobility for the most disadvantaged in society.
Without the necessary procedures in place to constrain red tape, it gets out of hand. Regulators have incentives to write regulations, but very often they have little or no incentive to review or remove old regulations that have outlived their usefulness. Furthermore, regulations create constituencies that benefit from the regulations’ continued existence, and these constituencies fight to preserve regulations once enacted, even when those regulations are causing

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A Sensible Sunset Review Process for Kansas

January 26, 2021

Chair Estes, Vice Chair Olson, Ranking Member Faust-Goudeau, and members of the committee:
My name is James Broughel, and I am a senior research fellow at the Mercatus Center at George Mason University. I am also an adjunct professor of law at Antonin Scalia Law School at George Mason University. My research focuses on regulatory procedures, cost-benefit analysis, and economic growth. Thank you for the opportunity to submit this written testimony today on regulatory reform in Kansas.
The US Department of Health and Human Services (HHS) recently finalized a regulation that attaches a sunset provision to most of its rules. My own research helped inform the economic analysis that accompanied that regulation. As part of that effort and my previous research, I learned a number of lessons that

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Reflections on Regulatory Reform in New Jersey

October 21, 2020

Chair Johnson, Vice Chair Karabinchak, and members of the committee:
My name is James Broughel, and I am a senior research fellow at the Mercatus Center at George Mason University. I am also an adjunct professor of law at George Mason University. My research focuses on regulatory procedures, cost-benefit analysis, and economic growth. Thank you for the opportunity to submit testimony today on regulatory reform in New Jersey.
Achieving meaningful reductions in the regulatory burden is hard. That is a lesson from a 2018 report I wrote about New Jersey’s regulatory reform program during the administration of Governor Chris Christie. New Jersey’s past experiences with regulatory reform can provide valuable insights for future reform efforts, such as those being considered before this committee

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Administrative Rule Reform in Oklahoma

September 22, 2020

Chair Jech, Chair Gann, and members of the committees:
Good morning. Thank you for the opportunity to speak today regarding the joint study being produced on Oklahoma administrative rules reform. My name is James Broughel, and I am a senior research fellow at the Mercatus Center at George Mason University in Arlington, Virginia, and an adjunct professor at the Antonin Scalia Law School at George Mason University. My research focuses on state regulatory institutions, the sources of economic growth, and the economic analysis of regulations.
I will be touching on three topics today:
Regulation is necessary in some cases. It can be justified to protect health, safety, and the environment. The accumulation of regulation, however, has a real cost, which should be kept in mind.
The Mercatus

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