Changing the Conversation About Government Regulation

US Capitol BuildingBy Daniel Carpenter

Washington Monthly

It’s late, and we’re tired. In the last year of the Obama presidency, a certain fatigue has set in to domestic policy debates, especially over regulation. That debate has been framed as a lesser-of-two-evils choice: either the Republicans’ bane of “job-killing” and “innovation-stifling” regulations, or the Democrats’ specter of “big banks,” “big oil,” “big pharma,” “big tobacco,” and any other sizable industry whose collective behavior puts us at risk.

Yet Obama, who has been so skillful in reframing debates in other areas—health insurance, the war on terror, race relations, gun control policies, and more—has failed to change the paradigm in regulation, much less develop a new one. Even as his Treasury Department developed the Dodd-Frank Act of 2010 and he signed it into law, his rhetoric and action on regulation bought into the Reagan-era theory of deregulation. Not unlike his Office of Regulatory Affairs administrator Cass Sunstein, who championed his office as able to slay “job-killing regulations” in an op-ed for the Wall Street Journal, Obama defends regulations (especially outside of the environmental domain) as a necessary evil, worth tolerating mainly because the alternative of leaving matters to the large corporations is even worse. Even in this year’s State of the Union address, he lambasted “outdated regulations that need to be changed,” and gestured toward the inevitable “red tape that needs to be cut,” with Republicans loudly applauding.

If there was one potential exception to this stale thinking, it might have come in the advance of behavioral science, in part the “nudge” paradigm popularized by Sunstein and the behavioral economist Richard Thaler and now institutionalized in the Social and Behavioral Sciences team at the White House. Nudges include things like defaults—such as, for instance, automatically setting aside a portion of a worker’s income in a 401(k) account and letting the worker choose to opt out if she feels like it—which supposedly can improve welfare without taking away individual choice. Yet outside of insurance contracts, “nudge” has made little to no difference in regulatory policy. The tools of the major Obama-era regulatory initiatives—Dodd-Frank, the Tobacco Control Act of 2009, the Credit CARD Act of 2009—essentially use traditional means of imposed requirements (like disclosure), prohibitions, monitoring, and delegation of oversight to administrative agencies. The problem with Obama is not that these initiatives have not advanced under his watch but that he has failed to articulate a deeper justification for them other than that we cannot trust the Big Bad Industry du jour. As a result, Republicans have no argument to respond to. Their talking points remain the same as they were under Reagan, and they go unchallenged.

Continue to full article . . .

Picture: דן חנוך (Own work) [CC BY-SA 4.0 (, via Wikimedia Commons

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