The tragedy of the political commons: Evidence from U.S. Senate roll call votes on environmental legislation

When the costs of regulation are borne by individuals outside of their political jurisdiction, an elected politician arguably will vote in favor of socially costly regulations because from his/her narrow perspective even small marginal benefits outweigh zero marginal costs. Our empirical analysis of the environmental voting records of U.S. Senators from 1991 to 2002 reveals a pronounced tendency for Senators to vote against (in favor of) environmental bills that impose costs in their (other) states. The straightforward implication is that elected politicians overgraze the regulatory pasture.     

Toward the usable recognition of individual benefits and costs in regulatory analysis and governance

Regulatory agencies in the United States and Europe have well‐deserved reputations for fixating on the total benefits and costs of proposed and final regulatory actions, without doing any more than anecdotally mentioning the subpopulations and individuals who may bear disproportionate costs or reap disproportionate benefits. This is especially true on the “cost” side of the cost–benefit ledger, where analysts exert little effort to even inform decisionmakers and the public that the costs of regulations might be distributed either regressively or progressively. Many scholars and advocates have observed that regulation can increase the efficiency of market outcomes, but caution about its untoward (or suboptimal) effects on equity. Here, we argue that without considering distributional information about costs and benefits, regulatory policies in fact can also cause violence to notions of efficiency, for two reasons: (i) society cannot hope to approach Pareto‐efficient outcomes without identifying those who must lose so that others can gain more; and (ii) because the harm experienced by involuntary risks and by imposed regulatory costs is likely non‐linear in its magnitude (at the individual level), efficiency is, in fact, a strong function of the shape of the distribution of these effects. This article reviews evidence about the distribution of regulatory costs and benefits, describes how agencies fail to incorporate readily available distributional information, and sketches a vision for how they could analyze costs and benefits to promote more efficient regulatory choices and outcomes.     

The economics of AIDS-related health insurance regulations: Interest group influence and ideology

The projected growth in the U.S. in the number of persons with AIDS has created concern about sources of financing the costs of health care services for persons with AIDS. Private health insurers have modified or considered modifying underwriting practices in response to the AIDS epidemic, but several state governments have developed significant regulatory constraints on AIDS-related underwriting practices. We model the state government's decision to impose AIDS-related regulatory constraints (HIV testing restrictions, restrictions on the use of information about sexual orientation, and mandated AIDS coverage). We find that HIV-testing restrictions tend to be more likely in states with relatively high AIDS prevalence rates and insurance industries that are relatively weak politically. States with prevailing attitudes favorable to persons with AIDS (i.e., relatively liberal states) are more likely than other states to impose HIV-testing restrictions. Measures of prevailing attitudes (ideology) appear to be the primary determinants of regulations prohibiting questions about sexual orientation, but economic interests are the primary determinants of mandated AIDS coverage.The authors would like to acknowledge the helpful comments and suggestions of Ned Becker, Janet Bronstein, David Colby, Patrick Donnelly, Roger Faith, Robert Hughes, Robert McGuire, Delfi Mondragón, Mike Morrisey, Jack Nelson and an anonymous reviewer, with the usual disclaimer.     

The private and social value of information in majority decisions

The paper contrasts the value of information at the private level with the social value when all voters have access to information. A sequence of examples illustrates how the private and social value of information changes as the distribution of benefits and costs derived from a project varies across individuals and states of the world.     

Devolving Regulatory Authority:The Federal and State Response

One of the major legacies of the Reagan administration was its devolution of regulatory authority to the states, particularly in the area of environmental protection. The article descr&es how federal officials at EPA and the OfFce of Surface Mining (Department of the Interior) transferred regulatory responsibility to the states and how state officials initially responded to devolution. In a number of states, regulatory officials clwse to vigorously enforcefederal environmental standards despite the administration's desire for a more relaxed approach to regulation. Haoever, euidence generated by the GAO and others suggest that many of the states lacked the willingness and ability to effectively shoulder their new responsibilities. By the end of the Reagan administration, opposition to devolution had emergedfrom a number of quarters and administration officials were faced with, once again, refashioning the regulatory partnership.     

Partisan politics,welfare states,and environmental policy outputs in the OECD countries, 1975–2005

Building on the burgeoning literature on the association between the welfare state and the environmental state, this study empirically examines how the politics of the former has affected the development of the latter. We suggest that the size of the welfare state shapes the calculus of environmental policy costs by partisan governments. A generous welfare state lowers the costs perceived by the left‐wing government, as large redistributive spending allows the government to mitigate the adverse impact of the new environmental policy on its core supporters, industrial workers. A generous welfare state also implies diminished marginal political returns from additional welfare commitment by the left‐wing government, which lowers the opportunity costs of environmental policy expansion. To the contrary, because of lower overall regulatory and taxation pressure, a small welfare state reduces the costs of environmental policy expansion as perceived by a right‐wing government. Our theoretical narrative is supported in a dynamic panel data analysis of environmental policy outputs in 25 Organisation for Economic Co‐operation and Development member states during the period 1975–2005.     

Capital Blight? The Regulation of Financial Institutions in Italy and Canada

The pressures of globalization and capital flight create two sets of challenges for national state structures. They are seen fo limit the boundaries of state action, and within those boundaries, they lead to a transfer of regulatory capacity to supra and/or subnational structures. The article explores the second set of challenges and asks whether globalization has led to uniform changes in the regulatory capacity of national states in the area of financial institutions. It argues that the Italian and Canadian experiences suggest that political and institutional factors may shape how national states respond to the pressure to shift regulatory capacity to structures at some other level. In the Italian case, the emergence of a single market for banking in Europe led to a strengthening of the state's policymaking capacity. In Canada, on the other hand, the federal government's authority was limited by competition with provincial regulatory regimes. Globalization may limit the boundaries of state action, but this does not necessarily mean that those boundaries will not be occupied primarily by national state structures.     

Toward a Regulatory Budget

A regulatory budget would require the federal government to treat compliance costs incurred by the private sector as if they were incurred by the government, without requiring the government to actually assume those costs. For example, EPA could be given a regulatory compliance budget of say $80 billion in FY98. A regulatory budget would provoke an annual debate in Congress on the size of EPA's or OSHA's budget. Such a debate would force the proponents to weigh the benefits and costs of various regulatory programs, something now lacking in the political process.
Interest in a regulatory budget reflects the slight gains in the quality of regulatory decision making resulting from mandatory regulatory review. It is now apparent that better information about the costs, benefits, and distributional consequences of regulation will not automatically improve regulatory decision making-although it would not hurt.     

The rise of the constitutional regulatory state in Colombia: The case of water governance

This article interprets the regulatory state in Colombia as the result of a dialectic process between transnational knowledge and domestic politics, which influence, transform, and inspire each other. Such a process results in an interesting constitutional variant of the regulatory state, in which neo‐constitutionalism becomes a counterbalance to the unchecked expansion of neo‐liberal regulatory practices. I, therefore, distinguish between neoliberal and constitutional regulatory states. As a result of neo‐constitutionalism, the domestic judiciary is empowered, and becomes a crucial actor to understand both the specific traits of this regulatory experience, and its interaction with global centers of power.     

Setting limits through global budgeting: hospital cost containment in Rhode Island

In 1974, hospitals in Rhode Island have participated in annual negotiations with state officials and representatives from Blue Cross to determine the allowed increase in statewide hospital costs (the "Maxicap") for the next fiscal year, based on projected increases in hospitals' revenues, changes in patient volume and operating expenses. Individual hospital budgets may be above or below the Maxicap as long as the total increase in hospital costs for all hospitals in the state does not exceed the negotiated amount. At a time when regulatory solutions are increasingly under fire, continued support for Rhode Island's approach to hospital cost containment from third party payers, providers and public officials stands in stark contrast to other states where rate setting was either dismantled or discredited as a cost control strategy. A negotiated global cap on hospital expenditures offers an alternative to formula-based state rate-setting methodologies which could be incorporated as part of an all-payer reimbursement methodology or as an incremental step towards more comprehensive reform.     

When States Discriminate: The Non-uniform Tax Treatment of Municipal Bond Interest

There is a long history of states using tax systems to encourage residents to invest in bonds issued by jurisdictions within their state. This preferential or discriminatory tax treatment was ruled unconstitutional in 2006 by the Kentucky Court of Appeals. The Kentucky court decision, which sets the stage for this essay, was overturned by the U.S. Supreme Court in 2008. This essay addresses the possible implications of this and similar discriminatory tax policies. Such discriminatory policies are the foundation of the municipal bond market, and altering the practice would have significant implications for revenue collections and borrowing costs in most states and localities. While the Supreme Court's position has been rendered, the case has caused policy makers and administrators to scrutinize discriminatory tax policies and their impact on budgets and borrowing costs.     

Regulatory budgeting: A bad idea whose time has come?

Advocates of regulatory relief propose a budget that would annually cap regulatory costs. But emulating fiscal budgeting would be much more difficult than they envision. An arbitrary macrobudgetary constraint would have to be selected, and the potential scope of the regulatory budget would be vast. The process of regulatory budgeting would be very-time consuming, and could increase micromanagement by the Congress. Estimating regulatory costs would be challenging, and ignoring regulatory benefits would be unfair and inefficient. A preferable alternative to regulatory budgeting would be to expand the Government Performance and Results Act to include cost-effectiveness reviews for regulations.     

The Role of Market-Value Accounting in Reducing Potential Taxpayer Subsidies: The Case of Deposit Insurance

The federal deposit insurance program required billions of dollars in taxpayer subsidies in recent years. Unless reforms are initiated soon, the program will continue to incur losses and will likely sizeable require subsidies in the future. Some of the blame for the past losses of the deposit insurance program has been attributed to the regulatory discretion and lack of information on the potential losses arising from the exercise of regulatory discretion. It is often argued that market-value accounting can be an effective check on regulatory discretion and can minimize the future costs of the program to the taxpayers. This study examines the role market-value accounting can play in reducing the potential taxpayer subsidies to the program. It examines the relationship between accounting system and losses to the deposit insurance program, discusses the problems in implementing the market-value accounting, and shows how market-value accounting can improve the effectiveness of the system of public regulation and reduce the adverse financial consequences of regulatory discretion. While the direct focus of the article is on the deposit insurance reform, the discussion and the arguments have applicability to improving the regulatory effectiveness of other public agencies and programs.     

The creation of neo-liberal corporate bias in transnational medicines control: The industrial shaping and interest dynamics of the European regulatory state

Abstract. Drawing on the political theories of corporatism, neo–liberalism and pluralism, and on comparative empirical research in Brussels, Germany, Sweden and the UK, this article conceptualises the nature of Europeanised medicines regulation. It argues that a marketisation of regulation has been established in the European Union as a result of competition between national regulatory agencies for 'regulatory business' from the pharmaceutical industry. In the pharmaceuticals sector the Europeanised regulatory state is a product of three key factors: (a) the European Commission's commitment to an 'efficiency' regime which would meet the political objectives of a single European market and the commercial agendas of transnational pharmaceutical companies, (b) the endemic corporate bias associated with medicines regulation in the most influential member states, and (c) the considerable success of neo–liberal politics across a number of major member states, including Germany, Sweden and the United Kingdom.     

The policy consequences of political corruption

Controversies abound over whether political corruption handicaps the disadvantaged, facilitates government action, or simply inflates government costs. Multivariate analysis using data from the American states supports none of the hypotheses. Rather, corruption appears to have virtually no policy impact, either directly or in interaction with party competition.     

The Regulatory Gift: Politics,regulation and governance

This article introduces the “regulatory gift” as a conceptual framework for understanding a particular form of government‐led deregulation that is presented as central to the public interest. Contra to theories of regulatory capture, government corruption, “insider” personal interest, or profit‐seeking theories of regulation, the regulatory gift describes reform that is overtly designed by government to reduce or reorient regulators’ functions to the advantage of the regulated and in line with market objectives on a potentially macro (rather than industry‐specific) scale. As a conceptual framework, the regulatory gift is intended to be applicable across regulated sectors of democratic states and in this article the empirical sections evidence the practice of regulatory gifting in contemporary United Kingdom (UK) politics. Specifically, this article analyses the 2011 UK Public Bodies Act, affecting some 900 regulatory public bodies and its correlative legislation, the 2014 Regulator's Code, the 2015 Deregulation Act, and the 2016 Enterprise Bill. The article concludes that while in some cases the regulatory gift may be aligned with the public interest – delivering on cost reduction, enhancing efficiency, and stimulating innovation – this will not always be the case. As the case study of the regulatory body, the UK Human Fertilisation and Embryology Authority, demonstrates, despite the explicit claims made by legislators, the regulatory gift has the potential to significantly undermine the public interest.     

The Substitution Approach To Intergovernmental Relations: The Case Of OSHA

Federal legislation of the last two decades has substantiallyreduced state autonomy in dealing with many regulatory issues.Participation in the implementation of these federal programsmay, however, enable states to exert some leverage over policyoutcomes. Variations in state leverage no doubt exist from oneintergovernmental grant program to the next. Substitution authoritymay be one variable accounting for this variation. Under a substitutionapproach, a federal agency cannot only sever the flow of fundsto a grantee; it can also step in and operate a program if statesfail to meet expectations or choose not to participate. Thisarticle generates more basic propositions about the substitutionapproach by analyzing its implementation under the OccupationalSafety and Health Act of 1970. The article examines the roleplayed by substitution authority in motivating the OccupationalSafety and Health Administration (OSHA) to adopt an aggressiveposture toward the states. The article then assesses whetherOSHA's aggressiveness prompted state grantees to exert considerableeffort on behalf of program goals. Finally, the implicationsof current reform proposals, which call for a sorting out offunctions between the states and the federal government, receiveattention.     

The decline in the number of school districts in the U.S.: 1950–1980

Between 1950 and 1980 the number of school districts fell from 83,642 to 15,987. Data for the fifty states for 1950, 1960, 1970, and 1980 are used to identify the factors that contributed to this decline. The focus is on the tradeoff between cost savings through scale economies (a few large districts) and a diverse population's demand for choice in public schooling (many small districts). We find that much of the decline in the number of school districts has resulted from: 1) the decline in the farm population and increase in population density, which has made it easier to take advantage of scale economies; 2) the growing importance of state aid, which reduces quality variation among districts within a state; and 3) the increase in the fraction of teachers that belong to the National Education Association teacher's union, which may reflect increased political influence used to lower the costs of organizing. Several states have laws that require school district and county (or state) boundaries to coincide. In the last section of the paper we estimate the costs of these laws. First, we compare the predicted number of districts, using the regression results in the earlier section of the paper, to the actual number in these states. Then we estimate a demand equation that is used to generate the dollar amount of the cost due to diminished interjurisdictional competition.     

GRESHAM'S LAW: THE REGULATORY ANALOGY

The authors argue that delegation of discretion over environmental regulation to the states may trigger a process analogous to Gresham's Law in which lax regulation in one state drives out stringent regulation in neighboring states. This devolution to regulatory laxity is illustrated by the lax pesticide regulations in five Midwestern "agricultural" states. Questions are raised about the effects of the Reagan Administration's commitment to reduce the stringency of federal environmental regulations and delegate more regulatory discretion to the states.