Tuesday, December 3, 2013

Left and Right Are Both Wrong About Regulation

by Cass R. Sunstein


December 3, 2013

In 1981, President Ronald Reagan instructed federal agencies that they could issue regulations only after demonstrating that their benefits justified their costs. With modest changes, Reagan’s successors, both Republican and Democratic, have continued to impose this requirement on agencies considering rules designed to protect clean air, food safety, workplace safety and much more.

But a crucial question remains: Can the government’s numbers be trusted, or are they just a lot of hot air?

In Washington, there are two radically different answers to this question. They tell us a lot about what is wrong with current political debates, and about what might be a sensible future path.

Within the Republican Party, not to mention the business community and conservative policy groups, many people share a single view: Government agencies are far too optimistic, even self-serving. Many Republicans think agencies systematically inflate benefits and deflate costs, cooking the numbers to make their rules appear far better than they actually are.

Within the Democratic Party, not to mention progressive organizations and liberal research groups, many intelligent people hold precisely the opposite belief. They insist that agencies systematically underestimate benefits and exaggerate costs. They think that in the real world, rules will impose only a small fraction of the costs that agencies project.

It turns out that neither side is right. Both Republicans and Democrats -- and industry and the public-interest groups -- have a great deal of confidence in evidence-free dogmas.