Thursday, November 17, 2016

Yglesias discovers rule of law

Matt Yglesias (HT Marginal Revolution) writes well of the danger facing America in the era of the regulatory state.
Those who support the regime will receive favorable treatment from regulators, and those who oppose it will not. Because businesses do business with each other, the network becomes self-reinforcing. Regime-friendly banks receive a light regulatory touch while their rivals are crushed. In exchange, they offer friendly lending terms to regime-friendly businesses while choking capital to rivals. Such a system, once in place, is extremely difficult to dislodge precisely because, unlike a fascist or communist regime, it is glued together by no ideology beyond basic human greed, insecurity, and love of family.
He's talking about the Trump administration.  Matt, where have you been these last 8 years? Well, better late then ever, but wow those partisan glasses make the mirror hard to see. (I might add that this is exactly how fascist and communist regimes work in reality. Ideology is easy to find.)

Update for Fire Man (I try not to endlessly push my previous work.) The Rule of Law in the Regulatory State

Update 2. A little less snarky. Still, the danger is real. Will Republicans, now in power, say thank you very much, pick up the phone and pen, and do unto D like D did unto R? Or will they be the ones to undo tit-for-tat, shove-it-down-their-throats policy, and reestablish executive restraint at least by custom if not by statute? That will take losing or delaying some policy fights, and foregoing the delicious irony of revenge. President elect Trump did threaten to use the IRS against political enemies. Let us hope that like much else was campaign rhetoric. Will the repeal and replace Obamacare happen strictly along party lines in 100 days -- and then be overturned itself by President Warren or Chelsea Clinton? Or will they take the time and effort to get a significant Democratic buy in? Time will tell.

I did not mean to say that the worry is unfounded, only that it goes back a ways in US politics,  and the  fight would now be oh so easier if people like Yglesias had kept true to principle while their policy priorities were being shoved down people's throats, and their political antagonists were the victims of the politicized regulatory state.

Good commentary from Glenn Greenwald on the Inspector-Renault quality of this outrage.


  1. What did Obama do to mess with Rule of Law?

    1. My guess would be the surveillance state, drone program, Libya, executive orders. Basically, anytime a president does an end-around Congress by using the executive control of government agencies to carry out policy. It's not ideal, no matter who is president, because it gives too much power to one person.

      There are two solutions, and they aren't mutually exclusive. The first is for Congress to actually do it's job, i.e, enact legislation, provide oversight, blah blah blah. The second is to shrink the size and purview of the government. You can't control what doesn't exist.

    2. HotBBQ,

      You may be referring to this executive order:

      Notice that this only applies to employees of federal contract workers.

      Nationwide, the federally mandated minimum wage is still $7.25 per hour. See:

  2. I was thinking the same thing as I read Yglesias's piece. You could do minimal editing to make that exact same article about the Clinton (or really any other) administration. He tried to create new definitions for Trump's brand of cronyism, but I'm not really buying it. I really hope Trump isn't serious about any of his free speech/media rhetoric, but Yglesias said nothing when the industry was coal or finance, now that it's media we're all supposed to lose our minds.

  3. Can we get rid of property zoning?

    Why is everybody against regulations but for property zoning?

    1. Who's this "everybody?" Read this blog, cato, heck even the Obama CEA has written against property zoning, or at least its extremes.

    2. There are a bunch of reasons:

      #1 - Zoning has been around for a very long time and, while often (usually?) a fallacy, most people equate "old" with "good."

      #2 - The benefits of zoning are very easy to explain, while the costs are not; in other words, anti-zoning proponents have yet to find a way to pass the dreaded bumper sticker test.

      #3 - The tool that should be used more heavily in place of zoning (i.e., code enforcement) is difficult to apply in practice, creating a "we have to use the chainsaws because we've run out of scalpels!" scenario.

      #4 - Zoning provides some degree of "insurance" against decreased home value; since we've made the odd decision as a country to (a) make most peoples' largest investment their home, while at the same time (b) imposing huge transfer costs upon swapping one home for another, it should not be a surprise that the demand for the insurance of zoning remains high despite the cost.

  4. "Matt, where have you been these last 8 years?...(I might add that this is exactly how fascist and communist regimes work in reality. Ideology is easy to find.)", So here you mean the US government has acted like a fascist regime during the past 8 years?

  5. Allow me to suggest a radical way to dislodge those collusive arrangements between gov and rent seekers. Anarcho-capitalism. Quoting Murray Rothbard, "The difference between free-market capitalism and "state capitalism" is the difference between "peaceful, voluntary exchange" and a collusive partnership between business and government that uses coercion to subvert the free market." Delimiting the state could be achieved at the ballot booth or the threat of peaceful secession.

  6. Cochrane cites the 2013 Ally Bank settlement with the government as an example of regulatory overreach and caprice. To Cochrane the methodology used to detect Ally Bank's violation was undisclosed, hence nontransparent and unfair to the bank.

    As if Ally Bank could not be expected to fully understand the risks of its business model under the Equal Credit Opportunity Act--the binding law.

    Regulation beyond the rule of law? Really?

    In the settlement Ally was commended for working cooperatively with the government to reach an appropriate resolution, and to improve its monitoring and compliance systems, the DOJ reported.

    In other words Ally admitted that a change of their behavior was required, and was commended by the government for realizing this.

    Doesn't sound like a case of unfair, beyond-the-rule-of-law regulatory abuse to me.


    Happy for the workers but cutting individual deals with companies is TERRIFYING


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