The Cost-Benefit Boomerang

by Amy Sinden

July 29, 2019

This commentary was originally published by The American Prospect.

Everyone in communications knows how to bury a news story: release it late on a Friday. So it was with the White House’s annual report on federal regulations, released months behind schedule on a Friday in February. As it has for many years, the report pegged the benefits of federal regulation in the hundreds of billions of dollars, swamping the calculated costs of compliance by at least 2 to 1 and possibly as much as 12 to 1—awkward results for the Trump communications team, to say the least. How to square these numbers with the “job-killing regulations” trope was a real head-scratcher.

It might seem like good news that regulatory safeguards actually do save a lot of lives, not to mention preventing a lot of diseases, accidents, and other bad things. But these big numbers on the benefits of federal regulations are driving the right wing crazy. Industry lawyers and lobbyists along with their allies at right-wing think tanks have been hard at work trying to discredit them for years now. The irony is that these are the same people who tried to sell us on the notion that government regulations should be subject to a cost-benefit test to begin with.

It’s an idea that traces back to the Cold War–era writings of Ronald Coase, a conservative economist with a penchant for free markets and a deep distrust of government. Cost-benefit analysis was quickly adopted by industry lawyers and lobbyists bridling in response to the wave of environmental health and safety legislation that swept through Congress in the 1970s. They banked on the assumption that imposing a rigid system of cost-benefit analysis would weaken regulatory safeguards, because the benefits of public-health protections—preventing disease, saving lives, preserving ecosystems—would be hard to quantify and so inevitably undercounted in relation to the more easily quantifiable compliance costs to polluters, manufacturers of unsafe products, and so on. But what made cost-benefit so attractive politically was its pedigree in neoliberal economic theory. That lent an air of academic legitimacy to the project and was a perfect fit with the right’s larger political strategy of selling the American public on laissez-faire economics.

In the intervening decades, these lawyers, lobbyists, think tanks, and other foot soldiers of the right have worked assiduously and with considerable success to sell the general idea that public policy should be guided by economic theory, as well as the more particular idea that government regulations should be made to pass a cost-benefit test to show that they are consistent with the “efficient” results that the hallowed free market would have produced. But in the last several years, this intellectual edifice the right has so painstakingly built has begun to crumble from within.

The cracks in the foundation began to appear in the 1990s and early 2000s, when air pollution monitoring stations installed throughout the country in the wake of the Clean Air Act began to bear fruit. A wealth of epidemiological studies documented the nasty health effects of one air pollutant that is widespread and easy to monitor—particulate matter. These tiny specks of airborne stuff produced by combustion, particularly the microscopic ones, get lodged deep in our lungs when we breathe, exacerbating heart disease, asthma, and a host of other respiratory illnesses, and generally pushing hundreds of thousands of Americans each year to an early death.

Using these studies, the EPA began to regularly produce jaw-dropping numbers on the benefits of virtually all its Clean Air Act regulations—numbers that easily swamp the costs. Indeed, the huge, multibillion-dollar benefits estimates attributable to this single pollutant have over the past decade amounted to more than half of the calculated benefits of federal regulation from all the executive branch agencies combined.

As the reality of this situation has begun to sink in over the past several years, the right has begun to react. Like the kid who suddenly realizes she’s losing the game she made everybody play in the first place, they’ve tried to change the rules midgame. They’ve cooked up various arguments for why the EPA should jettison its big numbers on particulates from its regulatory analyses. But in so doing, they’re undermining, and, in some instances, abandoning entirely the neoliberal economic theory that has undergirded right-wing anti-regulatory efforts for so long—straying instead into a new realm entirely untethered from any intellectually coherent theory about how government does or should operate.

Read the full commentary on The American Prospect website.

Top photo by the Natural Resources Defense Council, used under a Creative Commons license.

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Amy Sinden is the James E. Beasley Professor of Law at the Temple University Beasley School of Law in Philadelphia. She has been a visiting professor at the University of Pennsylvania Law School and at the Temple-Tsinghua Masters of Law program in Beijing,China. She is a member of the board of directors of the Center for Progressive Reform.

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