It's About to Get Real
The countdown to de-bureaucratization ticks lower
Is this the path to a controlled, one-off deflation back to pre-Pandemic levels?
‘Argentina’s deregulation czar, Federico Sturzenegger…[has] discovered a rough rule of thumb: Where deregulation happens, prices decline in the range of 30%. He has seen it in textiles, logistics and some agricultural products.’
A New Approach to Measuring the Burden of Regulation
The growth impact of regulation is something that requires more academic study.
‘Overall, quantitative and systematic analyses of regulatory costs (and benefits) in the aggregate, (that is beyond the specificity of a single rule) are all too rare. A simple application like ours is a partial and incomplete attempt, but at least it has the ambition of taking a macro perspective to the regulatory system in its entirety. Crucially, without such a macro-level understanding, large-scale regulatory reforms risk being implemented without sufficient information, potentially leading to unintended consequences.’
GOP Takes Control, Headed for a Fiscal Cliff
Tax expenditures involve distortions of the tax code that lead to lower revenue. These cater to interest groups, such as electric vehicle buyers and manufacturers.
They are a soft target for DOGE.
‘That leads us to the too-often-ignored option of reducing tax expenditures, which consist of various exclusions, deductions, credits and preferences. These are usually referred to as tax loopholes by those who don’t benefit from them or would prefer lower marginal tax rates. According to the Joint Committee on Taxation, these expenditures annually cost $1.8 trillion in lost revenue and have grown in number from 53 in 1970 to more than 200 today.
‘Two places to start reducing tax expenditures concern Joe Biden’s American Rescue Plan and Inflation Reduction Act, the latter of which included such expenditures as a $7,500 tax credit for electric-vehicle purchases. According to the CBO, the Inflation Reduction Act’s energy tax provisions alone will cost $622 billion over the next seven years.’
Jensen Huang breaks bureaucracy at Nvidia with whiteboard and flat management strategies
It’s funny how the most valuable companies in the world have a different approach to meetings: less bureaucracy, more argument.
‘Huang opposes the static nature of presentations commonly used by companies to convey information, as employees can hide incomplete thoughts behind polished formats and misleading text. He believes that whiteboard meetings enable managers to extract core ideas, driving them to be both rigorous and transparent.
‘The CEO particularly values the dynamic interaction facilitated by whiteboard meetings. During discussions, he often moves to a second whiteboard to write down his own insights, encouraging a real-time exchange of ideas. Following meetings, Huang summarizes key takeaways directly on the board, ensuring clarity on new ideas, direction, and responsibilities. He insists on using bold markers to ensure employees sitting at the back can see and contribute.’
The little-told story about the BART seat-slashing gang that was part of an upholstery racket
If you pay people to do something as part of a bureaucratic program, well, you’re going to get more of it.
Here, the BART paid people to fix slashed seats. So, the supplier paid people to slash seats in order to win more business.
It’s never the first-order thinking that ends up kicking you in the keister.
‘Freshly arrested, the man decided to bargain using an interesting, unknown bit of information. He told police there was a racket being carried out on BART trains, involving paid-for vandalism of the transit system's seats.’
A Federal Reserve Regulator Who Deserves the Boot
When regulation doesn’t work the way it was supposed to work, well, the bureaucrat’s first response is to cry for “Moar.”
The failure of Silicon Valley, Signature, and First Republic in 2023 were a disastrous repudiation of bank regulation in practice because it stemmed from plain vanilla interest rate risk.
Good God, if you can’t get this basic risk management at a bank right, what’s the point?
Maybe we need to start over from scratch.
‘While bank oversight is spread across several agencies, the Fed Vice Chair for Supervision is chiefly responsible for ensuring safety and soundness—and Mr. Barr failed in spectacular fashion. In mid-March 2023, Silicon Valley Bank experienced a run as well-heeled depositors, concerned by its unrealized losses, rushed to get their money out.
‘The FDIC stepped in to guarantee SVB’s uninsured deposits under its “systemic risk” exception, supposedly to prevent a contagion among midsize banks with large unrealized losses. Crypto-friendly Signature Bank soon was also seized by the FDIC as depositors fled over concerns about a regulatory crypto crackdown.
‘Then First Republic Bank teetered owing to its large loan book of below-market rate mortgages to wealthy customers. Jamie Dimon came to the rescue. JPMorgan bought the troubled bank in a sweetheart deal backed by the FDIC, which regulators hoped would calm markets. But where was Mr. Barr? He never did explain.
‘Instead he blamed . . . wait for it . . . too little regulation. Mr. Barr issued a report, which wasn’t approved by the Fed Board, that whitewashed his supervisory failures. It claimed examiners were handcuffed by a 2018 law that eased regulations on midsize banks. But SVB would also have been in compliance with tougher rules for bigger banks.’
The Trump-proofing in DC is in high gear.
‘It explains how there’s been a massive effort by federal employees to safeguard and shroud their jobs, in hopes of maintaining the cushy, no-stress environment they’ve carved out for themselves.
‘They’re panicking. For example, they’re changing titles of jobs that they feel might come under Trump’s scalpel, specifically those related to things like Diversity, Equity, Inclusion, and environmental justice. Some of these civil servants are even taking out liability insurance to cover lawyers if they're deemed demoted or fired.
‘What we’re seeing here is very plain: They’re willing to do what it takes to maintain the status quo.’
‘Shock the system’: Startups and DOGE take over Reagan forum
We’re about to find out if incumbent government contractors are really just an extension of the entrenched bureaucracy?
I have thoughts.
‘Defense tech firms like Palantir and Anduril believe the Department of Government Efficiency, a project led by Elon Musk and Vivek Ramaswamy, could make it easier for newcomers to prise defense contracts away from established prime contractors. ‘