Doucement
Incremental regulation beats wholesale regulation.
Crypto is here to stay.
Now, we just need real-world, mainstream use cases.
‘At a recent Stand with Crypto event in the UK, Shirzard told CNBC that the Republican congress will easily approve pro-crypto measures.
‘“We have the most pro-crypto Congress ever [in] history, we have an extraordinarily pro-crypto president coming into office.
‘I think the combination should finally allow the 50 million Americans who own crypto to have their interests and voice heard in policy.”’
Banks hit credit card users with higher rates in response to regulation that may never arrive
CFPB makes it harder for issuers to charge tardy cardholders late payment fees. So, the issuers replace the late fees with other fees. It’s regulatory whack-a-mole.
Who could have seen this coming?
‘Banks that issue credit cards used by millions of consumers raised interest rates and introduced new fees over the past year in response to an impending regulation that most experts now believe will never take effect.
‘Synchrony and Bread Financial, which specialize in issuing branded cards for companies including Verizon and JCPenney, have said that the moves were necessary after the Consumer Financial Protection Bureau announced a rule slashing what the industry can charge in late fees.’
22 Percent of Working Time Needed for Bureaucracy
Germany is struggling economically. No wonder ifo is looking into the bureaucratic burden.
This is the end-product of what Peter Turchin refers to as the overproduction of elites.
‘Increased requirements mean that employees have to spend 22 percent of their working time on bureaucratic tasks. This is the finding of an ifo Institute survey of managers in Germany. “Above all, companies report considerable personnel costs that are required to comply with ever new legal requirements,” says ifo researcher Ramona Schmid. “They also criticize the fact that increasing bureaucracy is a burden on competitiveness and entrepreneurial freedom, as well as influencing companies’ investment decisions.”’
I don’t know anything about local government in New Zealand.
It is interesting to see that the stimulus to cut bureaucracy (or at least to question it in public) is spreading to other parts of the world.
Bullish.
‘This is not limited to New Zealand. The democracies of the world are struggling under the burden of bureaucracy. Small wonder someone like Trump could win in the US.
‘New Zealand would be lucky if it could have an innovative disrupter like Elon Musk come in to look at our public sector organisations as the need for this sort of review becomes increasingly urgent.’
How Bureaucracy is Breaking Government
Even when the OMB ends a requirement or changes it, people just keep following the old one.
Imagine decades of this kind of disruption.
How does government get anything done? If government is to be a positive force, we must release it. Is that a conservative argument or a liberal one?
‘My focus is strengthening the capacity of state and local governments to use federal funds effectively. Over a trillion dollars in federal grants go out annually. Hundreds of overlapping federal programs and state and local governments are stymied by layers of administrative requirements, outdated rules, and misconceptions about what they're allowed to do. We need a way of cleaning that up.’
Presumably this idea of mandatory sunset provisions in regulation is a key component of the DOGE project.
‘A common way of imposing fiscal discipline in private companies, as well as in some governments, is a practice called zero-based budgeting (ZBB). The idea behind ZBB is simple: require that all expenditures be justified anew each period. There is no assumption that spending set at a particular level in a previous year means the same level of spending or more spending will be authorized the next period. Instead, a zero-base is the relevant baseline from which spending levels are set during the budgeting process. This chapter discusses a counterpart to ZBB in the regulatory sphere, namely zero-based regulation (ZBR). The idea behind ZBR is that regulations must periodically be justified anew, just as spending authorizations are periodically reevaluated under ZBB. A ZBR system will have two central pillars: sunset provisions and regulatory impact analysis requirements. Sunset provisions are automatic expiration dates built into regulations. These trigger reevaluation of rules and ensure the default is that rules go away, i.e., return to zero. Regulatory impact analysis requirements, meanwhile, are a form of economic analysis, which can be used as a means to rank and prioritize regulations according to their effectiveness. Taken together, these reforms have the potential to reduce costs substantially while also improving regulatory efficiency.’
Forthcoming House AI report will call for incremental regulation
We can understand something and then regulate it.
Or we can regulate it first and ask questions later.
The only argument for the latter approach is that the targeted activity is so prohibitively dangerous that it must be put in a lead box and buried in a cave.
I imagine that our cavemen ancestors had the same argument about fire.
‘“One of the guiding principles that we are embracing is the principle of incrementalism,” he said Wednesday evening. “We think it is foolish to believe that we know enough about AI and the direction AI is going to move in the next few years to be able to do an effective job completely regulating with one bill next year. So we think it behooves everyone to embrace the idea that we need to break this up into bite-sized pieces.”
‘Obernolte then anticipates that Congress will need to incrementally pass more application-specific legislation as AI technologies and use cases continue to grow. This approach stands in direct contrast to the other regulatory regimes that have approached the technology with large-scale action, particularly the European Union’s sweeping AI Act passed earlier this year and entered into force in August.‘
DOGE Can Work by Sending Power to the States
Another embedded principle in the DOGE effort may be (and should be) the restoration of a Renewed Federalism in the United States.
The federal government has been infringing upon state and local powers for so long and at such scale that unwinding this interference could lead to a balanced budget.
‘Restoring federalism also makes financial sense. Research from the Hoover Institution economist John Cogan reveals that the entirety of the federal debt can be traced to federal spending on what were once state and local responsibilities. In 1950, such spending accounted for just 2 percent of GDP; by 2019, nearly two-thirds of federal spending was on programs that were once managed by states. COVID-19 then drove an unprecedented surge in federal aid to states, pushing total expenditures to $6.75 trillion annually.
‘Had these responsibilities remained with the states, the federal government would likely have a balanced budget and no debt. While we cannot undo the decisions of the past, we now have an opportunity to correct course and set a sustainable path for the future.’
Transforming Japan’s Bureaucratic System: Opportunity Amidst Crisis
The kids aren’t dressing up as Scorcher for Purim anymore.
Elite graduates sour on joining the Japanese civil service as politicians take control of policymaking, diminishing the once comprehensive influence of the mandarin class.
‘The system is dramatically losing its ability to attract talent. Over the past 25 years, the number of new college graduates applying for elite career-track civil servants has plummeted by more than 50 percent, as shown in Figure 1 below. Furthermore, the percentage of top university graduates among successful civil service candidates has dropped from 32.5 percent to 9.7 percent, implying that the quality of applicants has declined. Further, resignations among younger elite career-track civil servants with less than a decade of experience have doubled over the past decade, and approximately 80 percent of the ministries consistently face a shortfall in their allocated staff capacity. Talented young individuals no longer see bureaucracy as a viable or attractive career path.’
Ernst Unveils Plan to Slash Federal Bureaucracy and End Telework Abuse
I think it will be interesting to see government unions defend their extraordinary work rules. Ordinary citizens in the private sector will be fascinated.
‘Ninety percent of federal employees telework;
Pre-COVID this number was 3%;
Just 6% of workers report in-person on a full-time basis;
Nearly 33% of federal employees are entirely remote;’
‘Government has become addicted to indirect regulation’ — Ripple CTO
Why is the government outsourcing enforcement?
Because the law doesn’t permit them to clamp down on these people.
But they can jawbone institutions into doing their bidding.
It would be a shame if something happened to your bank.
‘Schwartz argued that debanked entities switch service providers or take their funds underground — thereby evading surveillance and sanctions control altogether. The CTO also said de-banking undermines due process, freedom of speech, and the right against unlawful search and seizure. Schwartz wrote:
‘"Our government has become addicted to indirect regulation precisely because of these evils. It is cheaper and easier to pressure someone else to punish me than to charge me with a crime and give me due process, but the government ought not to punish people without giving them due process."’
The Administrative State in a Project 2025 World
The progressive view of administrative reform is that it is inherently authoritarian by consolidating the power of the executive branch in the office of the President, instead of letting it reside in “independent” agencies (whatever that means).
If Congress passes legislation to eliminate these independent agencies, is that authoritarian, too?
‘But that’s not all. The expansive administrative state that Project 2025 seeks to build is one that fits a distinctly authoritarian model. That means first and foremost a consolidation of political power in the President by eliminating the political insulation that independent agencies have long enjoyed and ending the Justice Department’s tradition of independence from the president.
‘It requires a significant erosion of constitutional checks and balances and federalism principles, including gutting congressional oversight through abuses of the Federal Vacancies Reform Act and the politicization of disaster aid to states. It thrives on the further privatization of essential government services, such veterans’ healthcare, primary education of children, and weather forecasts and alerts.
‘The most crucial element of all—the essential DNA of Project 2025, you might say—is its hostile disposition toward the rule of law. This disposition is best exemplified by the recommendation to reinstate Schedule F from the first Trump Administration, which would convert all career civil servants with policymaking responsibilities into at-will employees outside the protections of the merit-based civil service system. This new regime is, of course, necessary for the consolidation of political power in the President, as civil servants would be expected to pledge their loyalty to the President above their oath to uphold the law whenever the two conflicted. But it is also essential to the realization of the policy agenda set forth in Mandate for Leadership itself, much of which either flouts prevailing norms or outright violates existing laws.’