Cleaning House
Could Loper make the agencies less political? Let's make American regulation boring again.
Supreme Court Sensibly Made Markets Regulation Less Political
Could Loper lead to the de-politicization of the agencies? If political decisions that push the envelope of what the statute permits are going to be harder to make happen, then it might be better to work in Congress.
‘I see three more consequential changes likely in financial regulation. The first — and this applies more broadly — is the politics of agency heads becomes less important. Hopefully this will reduce the practice of presidents nominating ideologues and Congress failing to act on nominations. The most successful SEC chair in recent memory — perhaps in history — was Arthur Levitt; a non-political industry veteran who oversaw wildly popular and long-overdue changes including Regulation Fair Disclosure, plain-English documents, adoption of modern technology at the SEC, eliminating pay-to-play and most soft-dollar arrangements, and generally improving fairness, transparency and investor protection — all without major obstacles from lawsuits. (Levitt is a board member of Bloomberg LP, the parent of Bloomberg News.)
Supreme Court cases show how unchecked bureaucracy hurts 'ordinary' Americans
Bureaucracy hurts the little man the most because he lacks the resources of the wealthy and the influential to fight back.
‘“Sophisticated entities and their lawyers may be able to keep pace with rule changes affecting their rights and responsibilities,” Gorsuch noted. They can lobby for “reasonable” agency interpretations and “even capture the agencies that issue them.”
‘By contrast, Gorsuch added, “ordinary people can do none of those things. They are the ones who suffer the worst kind of regulatory whiplash” when the law changes according to bureaucratic whims.’
Competition, Not Regulation, Will Control the Cost of Obesity
One key problem for regulation is that it is not dynamic in its thinking. Static thinking says, GLP-1 drugs are expensive. Holding everything else constant means that the system will bankrupt itself by paying for these drugs, given the demand and the level of obesity in the US. Dynamic thinking says that after a transition period, other costs in the healthcare system will fall dramatically as people start living far healthier lives. This should be the goal, by the way. Really dynamic thinking says that the best cure for high prices is high prices. It will control demand when prices are high, until competition and new entrants start to lower prices.
‘A new class of weight-loss drugs such as Ozempic or Wegovy, known as GLP-1 agonists, is transforming how Americans treat obesity, with vast potential benefits for both patients and taxpayers. But just as we’re beginning to understand the promise and enormous value of these therapies, lawmakers like Bernie Sanders are warning that the drugs could “bankrupt our entire health care system” and urging that bureaucrats take over and the government impose strict price controls.
‘That would be a colossal mistake. GLP-1s will almost certainly pay for themselves many times over, even at current prices — and those prices will certainly drop considerably in the coming years as drug companies compete for market share. Setting prices on these innovative medicines would backfire by discouraging scientists from developing cost-saving drugs in the future.’
EU moves ahead while U.S. steps back on regulation
Large companies still have to deal with international regulators, despite the improved domestic regulatory outlook.
‘As the European Union enforces new digital regulations, the U.S. moves in the opposite direction by curtailing federal agencies' regulatory powers. Nonetheless, the EU's actions might force tech giants to fundamentally change their operating models.’
The Supreme Court’s War on Regulation Is Going to Tank the Economy
Is it really the case that every regulation has a positive, systemic impact? Isn’t it possible that we could benefit by “addition by subtraction” with a better systemic outcome from fewer regulations? Let’s ignore the chicken-little arguments and think about this rationally, shall we?
‘But in weakening the administrative state, Loper Bright will cause much greater economic harm because an economy can’t be strong if it operates without sufficient regulatory guardrails. If, for example, there are no rules to prevent employers from killing workers by exposing them to excessive heat, those employers who address the problem responsibly will be placed at a competitive disadvantage. An economy that requires 40 workers per year to die from heat exposure is not (at least in that respect) strong. It is recognizably backward and weak.’
You might think that in time of war, people can muster a greater sense of urgency. You would be wrong, at least in this case.
‘Ukraine's government has not distributed EU funding for the reconstruction and protection of energy infrastructure worth 150 million euros ($162 million) for four months due to "bureaucratic obstacles," Ekonomichna Pravda (EP) reported on July 4, citing sources familiar with the situation.’
Post-Loper, Congress must rein in the bureaucracy
One way of reconciling Loper with the modern regulatory state is to require a Congressional vote on every new rule. To make it practical, we might only require this for sufficiently impactful rule-making. Lo and behold, Congress has been trying to make this happen for years. You might be opposed to this when Chevron gives you all the cards. It’s a new day.
‘The better reform is the Regulations from the Executive in Need of Scrutiny Act. The REINS Act would force Congress to vote on every regulation with an annual economic cost of more than $100 million — which is to say, the regulations that have the biggest impact on Americans. If both chambers of Congress don’t vote to approve it, the regulation would die, just as a bill that can’t pass the House and Senate dies. If they both vote to move it forward, the regulation would be implemented.
‘The REINS Act has already passed the House of Representatives multiple times since its introduction in 2009, with the most recent passage coming in June 2023. The ideal version would cover not only major regulations but also agency “guidance” — the informal mandates that don’t go through the normal rulemaking process. Such guidance will probably become even more common after the Supreme Court’s Loper ruling. If agencies can’t issue clearly unreasonable regulations, they may resort to issuing clearly unreasonable demands that exist in a legal no-man’s-land.’