Showing posts with label regulation. Show all posts
Showing posts with label regulation. Show all posts

Sunday, August 25, 2013

Blame High Gas Prices, or High Demand for Gas?

It's often said that a tax on carbon is both urgently needed and politically impossible. One reason for the political roadblock is numbers, specifically the ubiquitous numbers along the road at gas stations, stating the price of gas. If those most visible of numbers start going up, people notice, and start complaining.

It's assumed that gas prices have a big impact on people's budgets--an impact that ripples out into the rest of the economy. A standard article in the business section included this bit of text:


"Shares of Wal-Mart fell 2.4 percent after it posted lower-than-expected quarterly sales in the United States, as shoppers were pinched by higher payroll taxes and gas prices." 
But the amount of money we spend on gas involves more than the price at the pump. More important are the number of miles driven, and how many miles our vehicles get on a gallon of gas. The article could just as easily have said that Wal-Mart has been getting pinched for years by the legacy of low gas mileage standards, which spawned the building of inefficient cars, which make people more dependent on cheap gas to drive the extra distance to Wal-Mart. Inefficient cars not only require more gas to run, they also collectively increase the cost of gas by increasing demand.

As so often happens, this news story gives emphasis to what we cannot control--the price of gas--rather than what we can control--the efficiency of the car we buy, and whether we live in suburban sprawl or a more compact community with amenities and employment closer by.

A tax on carbon is the sort of tax one can avoid, by using less carbon-based fuels. It encourages investment in greater efficiency, and thereby frees people from the treadmill of waste and the resulting dependency on cheap fuel. The bias of news reports that focus on the price of gas rather than other factors is making it harder to get off that treadmill.

Tuesday, October 30, 2012

Government's Legitimate Role--A Sports Analogy

One seemingly bottomless source of national pessimism today is the notion that government can't do anything right and that regulators are by nature the enemy of freedom and commerce. It's enough to make one head to the sports section, where a much healthier relationship with governance is on display.

Sports in general provides a fine analogy for what government's role should ideally be. The athletes and their teams, motivated to beat the competition, bring to their game the same energy and creativity that entrepreneurs and businesses bring to the marketplace. But though the players and coaches may dispute a call now and then, they don't make the mistake of perceiving regulation as the enemy. Rather, a good game requires clear rules and regulations that are fairly applied.

Boundaries in sports do not constrict action so much as channel it, challenging the players to refine their skills to make the most of the freedom and opportunities the game's framework provides. Without a net and clear boundaries, tennis would never have produced the likes of a Roger Federer. Similarly, manufacturers have responded to the combination of a competitive marketplace and rigorous government standards by greatly increasing the efficiency of appliances like refrigerators, while also lowering costs. Environmental regulations, then, are falsely maligned when in fact they can motivate manufacturers to dramatically improve their products and save consumers money.

There must be many football fans who believe that the nation's economy would thrive if only government regulations were slashed, and yet the game itself is a celebration of rules and regulations. All the while underregulated financial institutions were precipitating a financial meltdown in the fall of 2007, football fans were scrutinizing instant replays for the slightest infraction.

Earlier this fall, professional football provided a definitive demonstration of what happens when governance is given short shrift. When the NFL replaced its union referees with high school and college refs used to slower-paced play, their incompetence damaged the game. The NFL essentially replicated an experiment conducted by George W. Bush. By putting incompetent appointees in charge of FEMA, President Bush set the stage for the botched government response to the devastation in New Orleans following Hurricane Katrina.

Sports, too, clearly demonstrates the flaw in the assertion that regulations would better be determined by states rather than by the federal government. Imagine if teams in different states could make up their own rules and field dimensions. The result would be chaos, which is why industry so often lobbies for uniform standards at the federal level.

Ideologies that equate regulation with tyranny, common in political discourse, sound bizarre when applied to the realm of sports. You don't hear athletes quoting Ayn Rand and calling for the elimination of referees and boundaries in the name of freedom. Nor is there any illusion that professional athletes will nobly police their own behavior. As football has increased in speed and complexity, the NFL has increased the number of referees from 3 to 7. Contrast this with calls by many politicians to get government out of the way of financial markets, even as the financial sector has exploded in size, complexity and speed.

But the importance of regulation and its consistent enforcement goes beyond insuring an exciting, fair, well-paced competition, whether in sports or the marketplace. Particularly in football, good regulation also protects players from mutual destruction. It is understood that each player is potentially a lethal weapon, capable of harming self and others.

In some ways, chronic traumatic encephalopathy--the longterm consequence of repeated concussion--is to football what climate change is to a fossil fuel-based economy. Both maladies are slow to manifest, eventually making normal life impossible. How does one save football, when the violence it is based on puts players' brains at risk? And how to save our economy, when the fuels it is based on put the nation at ever-increasing risk of catastrophic changes in weather patterns? Here, again, the sports world has proven more mature and reality-based than the political realm. As scientific evidence of the long-term impact of concussions has accumulated, denial has given way to regulatory efforts to grapple with the problem.

As in the marketplace, the goal in football is not to rid the game of regulations, but to find the right balance. Too much regulation stifles creativity and slows the action. Too little breeds chaos and puts the players and the game itself at risk. When well-targeted regulations are consistently applied, governance disappears into the background and all attention can be focused on the game.

It is this aspect of the anti-government movement in our national political discourse that is most corrosive of the nation's functioning and spirit. The constant questioning of government's legitimate role in regulating society has the paradoxical effect of keeping government in the foreground, a bleeding sore that will not heal. We need to get past this constant berating of government, acknowledge its vital role, and work to refine its implementation so that it can hum along smoothly in the background.

Referees and regulators will never be loved. But there can be no doubt they are vital to the game. It's time such an understanding spreads to our political discourse.

A version of this piece appeared in the NJ Star-Ledger, coincidentally published the morning before Hurricane Sandy devastated the eastern U.S. It was later reposted at ClimateProgress.org.

Thursday, March 31, 2011

Flushing Outdated Information Out of Public Discourse

Senator Rand Paul of Kentucky, in an attack on regulation of light bulbs, recently resurrected old complaints about low-flow toilets. In a Gail Collins column in the NY Times, he is quoted as saying, “You busybodies always want to tell us how we can live our lives better. I’ve been waiting for 20 years to talk about how bad these toilets are.”

What we really need is a way to flush unsubstantiated assertions out of the national discourse. Though he should know better, given his leadership position, Mr. Paul is suffering from a common malady--a point of view based on limited and very dated information.

Back in 1997, when the federal government passed a law requiring that all new toilets use a maximum of 1.6 gallons of water per flush, editorial boards and comedians seized on the issue as an example of regulatory excess. I researched the issue and was surprised to learn that the national regulation had actually been requested by the industry, and that many companies had responded by designing effective toilets that conformed to the regulations. In the last couple years, companies have developed designs that use even less water and yet far outperform the pre-1997 toilets.

There are two stories here. One is that government regulation can challenge industry to innovate in ways it would not have otherwise. The other aspect is that it is foolhardy to base critiques on old information. While falsely criticizing government regulation, Mr. Paul unwittingly casts aspersions on a constituency he likely supports: the many companies who responded to regulation by designing better products for their customers.