Second Order Effects
Some regions may become worse off because of Trump deregulation.
Trump's Regulatory Gear Shift Means Turning to a Tested Playbook
It ain’t going to be a straight line.
Regulatory competition will mean that some states and other players will move to occupy the regulatory room the federal government relinquishes.
The irony is that some states and other countries may become worse off because they take advantage of the opportunity to over-regulate in this new ground.
We’re going to see a hell of a lot more diversity of outcomes.
Cue the unintended consequences.
‘While many of the changes at the federal level will be more business-friendly, don’t assume the US will return to a Roaring Twenties era. State, local, and international governments aren’t beholden to, and may actively counteract, US federal deregulation.
‘Depending on the industry, businesses and investors must start focusing on regulatory changes that could yield both positive and negative impacts.’
UBS boss warns against excessive banking regulation ahead of overhaul
The best regulation is self-regulation. You don’t do stupid things because you want to live another day.
Regulation exists because people still do stupid things. There should be a tradeoff between the growth that liberty creates and the management of the downside from overly risky behavior.
We never seem to talk about the tradeoff.
It’s always, “Risk is bad.”
‘Switzerland should not set rules for its banking sector that put it at a disadvantage, UBS (UBSG.S), opens new tab CEO Sergio Ermotti was quoted as saying on Monday, as the country prepares to overhaul regulation following his bank's takeover of Credit Suisse.
‘Swiss authorities are in the coming weeks due to put forward stricter banking rules aimed at preventing a repeat of the 2023 collapse of Credit Suisse, which has left UBS as the country's sole global bank.’
5 Absurd Examples of Government Waste in 2024
One key focus area for DOGE should be to get AI to scrub the federal register in search of programs that benefit a narrow constituency.
Easy savings.
‘Why does such government waste persist year after year? A significant part of the explanation traces back to the concept of concentrated benefits and dispersed costs. Essentially, the beneficiaries tend to be a small, concentrated group, so they lobby hard for these outlays because they stand to gain a lot from them. Taxpayers, on the other hand, tend to be dispersed and only minimally affected by any single expense, so it’s not usually worth it for them to lobby against the spending, or even learn about it in the first place.
‘Economist Gordon Tullock famously illustrated this concept with his fictional Tullock Economic Development Plan. The plan “involves placing a dollar of additional tax on each income tax form in the United States and paying the resulting funds to Tullock, whose economy would develop rapidly.”’
In Praise of Bureaucracy – A New Era of Cyber Threats
Bureaucracy slows things down. You know what’s good to slow down. Bad guys penetrating the network.
Maybe there’s another way that doesn’t slow everything else down.
‘This is where bureaucracy becomes a vital ally. By adhering to structured processes, requiring written approvals, and enforcing additional layers of verification, organizations can protect themselves from such threats. Bureaucracy’s insistence on “doing things by the book” might feel cumbersome, but in cases like these, it can prevent catastrophic consequences.’
Cameco suspends uranium production at Inkai JV in Kazakhstan over bureaucratic holdup
It’s about the paperwork.
‘Cameco’s (TSX: CCO; NYSE: CCJ) Inkai joint venture project in Kazakhstan has suspended uranium production because of a bureaucratic holdup, the Canadian producer said Thursday.
‘The in-situ recovery JV, in which Cameco holds a 40% stake and state-owned Kazatomprom (LSE: KAP) holds 60%, didn’t get an extension to submit its project paperwork because of a delayed submission to Kazakhstan’s energy ministry.
‘The extension was expected to come through last year, and as recently as Dec. 26 reports hadn’t indicated that production might be suspended, Cameco said in a release.’
Unintentional setbacks: How bureaucracies can contribute to policy failures during implementation
Friends come and go, my bureaucrats stay eternal.
The DC two-step is a game where the permanent civil service slow walks policy implementation when they disagree with the strategic intent.
‘Successful implementation should be viewed as a negotiation between politicians and the bureaucracies in the public sector. When policies go to government offices, they could get stuck in their hand due to various unintended causes. According to Eugene Bardach (1977), some such incidents can be understood as games played by bureaucracies that exist in government institutions. We believe that understanding these games is crucial to ensuring that policies achieve their intended outcomes in Sri Lanka.
‘The Tokenism Game refers to a strategy employed by implementers to give the appearance of compliance or progress while minimising actual dedication towards the initiative. This game often arises when those responsible for implementing a policy aim to please higher authorities and the public without fully committing to the intended goals of the policy.
‘This can lead to a situation that “looks good but does little.” This game is all about doing the bare minimum to make it look like progress is happening. Officials take small, symbolic actions, like launching a pilot project or publishing a glossy report, a media press, but avoid real work that could implement the policy. When this game is played, bureaucrats introduce programs or make public announcements to show they are working, but these actions do not address the root issues. It is like painting over a cracked wall without fixing the cracks underneath.’
What Jamie Dimon’s potential successor says about regulation, customer growth
What she said.
‘Chief on Marianne Lake’s list of regulatory concerns: when “the playing field isn’t even,” and where “as a result of regulation or legislation, effectively, winners and losers are being picked.”’
How much of the elevated healthcare costs American pay is due to regulation?
‘A study referenced in the National Center for Biotechnology Information (NCBI) touches on the fact that increased regulatory requirements often lead to higher costs for development without proportionate benefits to patient care. One of the factors noted was that the approval process can become so lengthy and expensive that many innovative technologies either never become exposed or hit the market at prices that make them inaccessible. The result? A decrease in patient outcomes and slower adoption of life-saving innovations.’
History Shows Big Changes in ‘Big Government’ Are Hard to Achieve
Don’t underestimate the power of the civil service to push back on the elected representatives.
A mandate is a starting point. Nothing more. It is necessary, not sufficient.
‘“They are fighting with the bureaucracy, and the bureaucracy always wins,” said Ray LaHood, who served as a Republican House member from Illinois during the Gingrich era and later became secretary of transportation under President Barack Obama. “They develop to a fare-thee-well every technique possible to stall, delay and make sure things don’t happen.”’
Academic bureaucracy: The good, the bad and the ugly
We stopped doing cost-benefit analysis (and reviewing the accuracy of ex ante estimates) a long time ago.
‘The bad bureaucracy includes processes which take a lot of time and effort, require tons of paperwork, stamps, signatures, formal meetings etc, which even though they need to be simplified and expedited must be in place in order for the laws to be enforced and the checks and balances to be in place. For example, even though department meetings can sometimes last for hours and entail tons of arguments and frustration, they are necessary for the purposes of a democratic and transparent decision-making process.
‘In addition to the above, there are situations where not only lots of time and energy are invested (or, even better, wasted) but the outcomes of those processes do not come with added value to the individual(s) involved or the system as a whole. That is, it is a cost without a(n) (obvious) benefit. ‘
'Elon Musk may have to fight more against private interests than against bureaucrats'
Can DOGE inspire other countries?
‘He will know how to fight the "system," with the secret hope that in other countries, the example of his action, or even the simple threat of acting like him, will help establish a balance of power against bureaucracies. This is clearly what Guillaume Kasbarian, former minister [of the civil service] in the Barnier government, in charge of transforming the public sector, thinks.’
EU bureaucracy is provoking a fresh energy crisis
The EU doesn’t produce a lot of fossil fuels. They consume a lot of fossil fuels. They think that they have the power to dictate policies to fossil fuel-producing countries.
Guess again, Poindexter.
‘But the bloc has entirely overestimated its own leverage while underestimating that of its opponents. By the most diligent calculations, the EU’s share of global oil production is under 0.4%. In terms of natural gas, this figure stands at just 2.3%. Regarding coal, the EU accounted for 309 million tons of the total 8,057 million tons produced worldwide in 2021, representing only 3.8% of global production. A cynic might say that it is easy for Brussels to demand due diligence in production processes because it does not produce anything themselves.
‘As the Financial Times reports, the measures for non-compliance are likely to deter business in Europe. “The law requires EU countries to introduce powers to impose fines for non-compliance with an upper limit of at least 5 per cent of the company’s annual global revenue,” the report states. Qatar’s energy minister said that this would be an unacceptable amount of profit to forfeit, and thus, state-owned QatarEnergy would stop importing to Europe.’
Artist puts up whimsical statues on utility poles in LA neighborhood.
Everyone loves them.
So, the DWP took them down, despite overwhelming public and political support for the project. Then they refused to engage.
It’s no wonder the DWP has been plagued by scandals. They have no accountability.
‘It is revealing and distressing that the Department of Water and Power in Los Angeles is seemingly not susceptible to political pressure, either from community groups or even local elected officials. I recall, not so long ago, that when Councilpersons demanded action or restraint from city agencies, they took such demands seriously.
‘DWP appears to be an empire of its own, indifferent to the people who ostensibly are elected by the people. They, the elected officials, indicated that they could do no more. Councilwoman Park conceded as much despite her strong efforts.’
Why rent regulation remains so hard to undo in NYC
Could a Trump HUD catalyze the end of rent control in NYC by withholding billions in funding?
‘More recently, in 2018, the liberal Brookings Institution cited the same problem: “Once a tenant has secured a rent-controlled apartment, he may not choose to move in the future and give up his rent control, even if his housing needs change.” This “misallocation,” Brookings continued, is not without major consequence, most notably “empty-nest households living in family-sized apartments and young families crammed into small studios.”
‘Last year’s Census analysis of New York housing data suggests that’s exactly what is happening here — as young people crammed into subdivided studios with multiple roommates know well. The difference between rent-regulated and market-rate housing in the Big Apple is stark: Only 94,000 (24%) rent-stabilized tenants had moved (either in or out) in the past year, compared to 221,000 (57%) of market-rate tenants. Rent-stabilized tenants are more likely to stay put — forming a kind of housing blockade for newcomers or households with kids who need more bedrooms. As per the Census, the long-term rent-stabilized tenants were not necessarily low-income: 30% reported incomes above $100,000 a year—in keeping with notorious stories of the actress Mia Farrow and Congressman Charles Rangel enjoying rent-stabilized units. (Farrow inherited hers through her family, as the law permits.) ‘