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James Broughel

James Broughel



Articles by James Broughel

A U.S. Sovereign Wealth Fund? | Discourse

12 days ago

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

24 days ago

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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The Mortality Cost of Expenditures

July 21, 2020

This paper updates the mortality cost of expenditures, which has relevance to a broad range of policies, including regulations, wars, and COVID‐19 restrictions. Because changes in income lead to changes in mortality risk, health investments costing more per life saved than a threshold cost‐per‐life‐saved cutoff level are expected to increase mortality risk. This article discusses the mechanisms driving this relationship and provides recent empirical support. The 2019 cost‐per‐life‐saved cutoff level at which expenditures increase mortality risk has a lower bound of $83.1 million and an upper bound of $133.8 million, with a midpoint of $108.5 million.

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The Social Discount Rate: A Primer for Policymakers

June 30, 2020

The social discount rate used in cost-benefit analysis (CBA) is an interest rate applied to benefits and costs that are expected to occur in the future in order to convert them into a present value. This conversion is done to ascertain what those benefits and costs are worth today. The social discount rate is widely considered to be one of the most important inputs in CBA in that small changes in this rate can result in large swings in present-value calculations, thereby having a major influence on whether a project passes or fails a cost-benefit test. However, the social discount rate is widely misunderstood for a variety of reasons. This primer explains the basic conceptual issues involved with the social discount rate and tries to clear up some common misunderstandings.
Basic Concepts

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Compounding Pharmacies Offer a Sensible Way to Tackle Drug Shortages

May 4, 2020

In early April, President Trump generated considerable controversy for seeming to endorse hydroxychloroquine, an antimalaria drug, which some claim has shown promising results in treating COVID-19. The FDA subsequently issued a warning about potential side effects from using the drug. But in the interim, media attention led to a surge of purchases of the drug, which in turn, has led to shortages affecting regular users who need hydroxychloroquine for other purposes, such as treating arthritis or lupus.
More generally, the pandemic is increasing demand for drugs of all kinds, from acetaminophen to asthma inhalers, raising concerns about shortages for a wide range of prescription medications needed in COVID-19 treatment. While the FDA has responded to these concerns by adding some drugs to

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COVID-19 Reveals the Need for a Regulatory Reset

April 17, 2020

The COVID-19 pandemic has highlighted the many deep inadequacies of the regulatory system of the government of the United States. Nearly every day brings news about red tape being rolled back because it has hampered efforts to test for COVID-19, to treat patients in need of medical care, or to send checks or make loans to everyday Americans who are losing their livelihoods.
For now, the United States remains in the midst of an emergency, which has to be the priority. When the pandemic has receded, however, policymakers should prioritize reviewing these regulations to determine what went wrong. This evaluation will require setting up a systematic process for reviewing existing requirements and identifying those in need of modification. Although this kind of institutionalized review process

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