by John H. Cochrane via Grumpy Economist
Law and the Regulatory State is a little essay, my contribution to American Exceptionalism in a new Era, a volume of such essays by Hoover Fellows. It takes up where Rule of Law in the Regulatory State left off.
James Pethokoukis | AEIdeas
President Trump has cited deregulation as one of his biggest accomplishments so far, and White House officials mention the ongoing deregulatory push as a reason to believe economic growth can reach 3 or 4 percent. So, how is the administration doing so far?
Andrew G. Biggs | Forbes
According to the Government Accountability Office, in 2013 the federal government dismissed 3,489 employees for poor performance, a dismissal rate of 0.18 percent. The Equals Act would provide the federal government with greater time and flexibility to examine the performance of newly hired federal employees before those employees receive job protections that effectively entitle them to a "job for life."
Separately, I analyzed how the top lobbying spenders performed. The results were similar.
In 2013, the top publicly traded firms that lobbied were as follows: Northrop Grumman, Comcast, General Electric, AT&T, Alphabet, Boeing, Lockheed Martin, United Technologies, Verizon Communications and Exxon Mobil. The information was accessed via the OpenSecrets.org website.
I then looked at the performance of each stock over the next three years (2014 through 2016), constructed a portfolio with equal weights of each stock and looked at the combined gains. Without dividends, they rallied approximately 30% over the three-year period.
I chose the NYSE Composite Index as a benchmark to compare the results. The S&P 500 consists mostly of massive corporations that tend to spend more on lobbying than the average company, such as many of those in the composite index.
The result: $10,000 invested in the model portfolio would have outperformed $10,000 held in the index by more than 20 percentage points.
https://www.forbes.com/sites/simonconstable/2017/11/13/how-to-profit-from-the-swamp/#38a0b7873c28
A new study for the Mercatus Center at George Mason University uses an economic model that examines regulation’s effect on firms’ investment choices. Using a 22-industry dataset that covers 1977 through 2012, the study finds that regulation—by distorting the investment choices that lead to innovation—has created a considerable drag on the economy, amounting to an average reduction in the annual growth rate of the US gross domestic product (GDP) of 0.8 percent...."
https://www.mercatus.org/publication/cumulative-cost-regulations