Obamacare Adds 10,350 pages to Existing Regulations

From Austrian economist Gary North at the Tea Party Economist

When the government passes a law, it must be enforced. The executive branch of the government then makes up the actual enforcement rules. It interprets the law and translates it into actual regulations.

The ObamaCare law was 2,000 pages long. That is just the beginning. Now the executive branch is building on its foundations.

The specific interpretations are published in the Federal Register, which is published daily by the federal government. It publishes about 80,000 pages of regulations a year. Each page is three columns of rules that can be understood only by very specialized and very expensive lawyers in a particular field.

CNS news sent a reporter to interview Democrat Congressman Henry Waxman. He asked Waxman if he had read all 10,535 pages. Waxman refused to answer. He said it was a propaganda question. He refused to answer.

You owe it to yourself to see one page in the Federal Register. Few Americans ever have. Go here. You will see a highlighted link: Today’s Issue of the Federal Register. Click it. You will see articles. Click the PDF of any article.  Then read just one column. You will not have to read all three to get the picture. Multiply this one column by 240,000. That is one year’s output.

Burdens from more regulations or mandated social controls translates to higher costs of compliance, higher taxes, more restrictions of commerce and civil liberty, regulatory arbitrages (loopholes-shadow activities) and regulatory capture, redistribution of resources and power from markets to the political class and their cronies equals increased politicization and social tensions, corruption, and lesser commerce which all leads to a lower standards of living

Chart of the Day: Obamacare Regulations: 8 Times Longer Than Bible

From CNS News (hat tip Tea Party Economist)

Since March 2010, when President Barack Obama signed the Patient Protection and Affordable Care Act (PPACA) and its companion Health Care and Education Reconciliation Act (HCERA), the administration has published in the Federal Register 109 final regulations governing how Obamacare will be implemented.

These regulations add up to 10,516 pages in the Federal Register—or more than eight times as many pages as there are in the Gutenberg Bible, which has 642 two-sided leaves or 1,286 pages.

From the admonitions of Roman orator lawyer and senator popularly known as Publius Tacitus (or Gaius Cornelius Tacitus) [Annals 117]

laws were most numerous when the commonwealth was most corrupt (or the popular variant: The more corrupt the state, the more laws)

How Regulations Deter Investments: The China-Europe Story

Many Chinese firms including State Owned Enterprises (SoE) have been considering to invest in Europe as the latter eyes $560 billion of Chinese FDIs in 5 years.

Unfortunately regulatory barriers have been a huge turn off

From Reuters:

But getting your head around European laws and visa restrictions, as well as the fear that tough economic times could spark more political instability, make Europe hard to navigate for Chinese firms.

In fact the surveyed firms perceive Africa and the Middle East as having a more favourable business environment than the EU.

Chinese firms find EU law particularly troublesome because there is no unified inbound investment approval process and some member states have their own security reviews…

Six in 10 of the firms surveyed were SOEs and the most popular EU country for Chinese investment was Germany, with France a distant second.

Chinese firms asked for more support with the operational issues they face from policymakers in Europe and back home.

Regulatory obstacles can also signify as forms of disguised protectionism via technical barriers to trade as product or safety standards as well as people protectionism which limits flow of people.

The European crisis will hardly be resolved until real reforms to promote a business friendly environment or by the liberalization of the economy.

Also the above also reflects on the Africa’s ‘globalization’ boom story which has been attracting lots of Chinese investments. Chinese FDI reportedly zoomed to $14.7 billion in 2012 up by 60% from 2009 (ChinaUSfocus.com)

Overciminalization from Environmental Laws

In the US, the rapid escalation of arbitrary environmental regulations has been prompting for growing accounts of needless political persecutions.

From Foxnews.com

The growing web of laws that can land unwitting violators in jail is commonly referred to as "overcriminalization." These are not laws prohibiting fundamentally wrong behavior like murder or rape. Critics say these laws create offenses that violators often don't realize are illegal until it's too late.

Punishment can range from a few hundred dollars in fees to lengthy prison terms. Some say the extraordinary expansion of the criminal code on federal, state and local levels leaves the public exposed to abuse at the hands of officials.

'You take away the incentive for somebody to do something bit by bit by bit. It’s like peeling the layers off an onion. You can only peel so much and then you don’t have any onion left'- FIshing boat Capt. Terrell Gould

When it comes to environmental laws, the states getting hit the hardest are the five that border the Gulf of Mexico -- Texas, Louisiana, Mississippi, Alabama and Florida. Among them, nearly 1,000 laws criminalizing activities along the coast have been put on the books, Texas Public Policy Foundation analyst Vikrant Reddy said. 

While there is no concrete figure, there are an estimated 300,000-400,000 environmental laws, statutes and mandates believed to be in circulation nationally. Many can land a person in prison, regardless of whether another person, plant or animal is harmed.

Gosh 300-400K laws! 

More steps towards the scenario forewarned by the great F. A. Hayek in his classic book, the Road to Serfdom, here is a snippet (p.86).

By giving the government unlimited powers the most arbitrary rule can be made legal: and in this way a democracy may set up the most complete despotism imaginable.

Vatican’s Scapegoating Capitalism

The easiest way of blaming social evils has been to bash capitalism. 

A good example has been the recent New Year homily by the Catholic Pope Benedict XVI who condemned “unregulated capitalism” for sowing “hotbeds of tension and conflict caused by growing instances of inequality between rich and poor” due to "the prevalence of a selfish and individualistic mindset which also finds expression in an unregulated financial capitalism” (BBC)

In the eyes of the Pope, the world operates on unregulated or unfettered individualism. 

In reality, the world is being suffocated by mounting regulations that has essentially been shifting the balance of social power from the markets to politicians.

Proof?

In 2012, in the US 29,000 laws came into existence in the state laws with more coming.

From CNBC.com

In 2013 in Illinois, motorcyclists will be able to "proceed through a red light if the light fails to change." In Kentucky, releasing feral or wild hogs into the wild will be prohibited. And in Florida, swamp buggies will not legally be considered motor vehicles.

On Jan. 1, as crowds of people toast to a new year, more than 400 news laws across the country will take effect — and possibly improve life for some.

"The laws that state governments deal with are really the laws that impact people on a daily basis," said Jon Kuhl, a spokesmanfor the National Conference of State Legislatures, which tracks the bills. "Whether amending or updating laws or enacting brand new legislation, it was an active year."

In addition to the new laws of 2013, more than 29,000 laws were passed by state legislatures this year, Kuhl said. Many dealt with healthcare, education, gay rights, child safety and the Internet.

And that’s aside from Federal laws. (MSNBC estimates the above at 40,000 laws including federal)

Another fact is that US tax code has ballooned from 400 to 72,000 words.

As Voxxi notes (chart theirs)

We have more professional tax preparers in the United States than law enforcement officers (765,000) and professional firefighters (310,400) combined.

But we need them. Consider this: in  1913, we had 400 pages of federal tax code in law. Today, its more than 72,000 pages.

Fear of being audited has led to this boost in tax preparers.

In short lobbying, tax avoidance, corruption and other means to influence political institutions to acquire favorable treatment becomes the commonplace operations.

 

And the above is just a segment of the overall political picture.

In other words, the Pope got his perverted idea of social malfeasance backward. Either the Pope has been misinformed or has not been forthright.

The Pope only needs to see how government debt levels in developed countries has been skyrocketing and how central banks have been bailing out the the privileged bankers. This has hardly been a function of individual-market based greed but of greed by those in power and their cohorts.

What the Pope and the Vatican seem to really rebuke hasn't been unregulated capitalism but state capitalism, corporatism or cronyism.

Yet in truth, individuals are not innately evil. It is mainly political power that debauches morality.

As the great John Emerich Edward Dalberg-Acton, 1st Baron Acton, popularly known as Lord Acton [Online Library of Liberty] pointed out

I cannot accept your canon that we are to judge Pope and King unlike other men, with a favourable presumption that they did no wrong. If there is any presumption it is the other way, against the holders of power, increasing as the power increases. Historic responsibility has to make up for the want of legal responsibility. Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men, even when they exercise influence and not authority, still more when you superadd the tendency or the certainty of corruption by authority. There is no worse heresy than that the office sanctifies the holder of it.

I am inclined to think that institutions like the Catholic church have used capitalism as convenient scapegoats when they are underfire, i.e. to deflect on the raging controversies, such as charges of institutional corruption and sexual abuse  which like the Australian Catholic Church admits and apologized.

Is it not that the Bible warned that “He that is without sin among you, let him first cast a stone”? (John 8:7)

Does this not apply to the Vatican too?

Quote of the Day: Business Advise: Get Lawyers and Lobbyists

If you run a business, get a lot of lawyers and lobbysists. He who writes the regulations will make a lot of money. He who does not will lose.  Make sure you make the right political contributions and don't say anything critical of those in power. You will need a discretionary waiver of something, and these rules are so huge and so vague, the regulators can do what they want with you. Don't be the one to get "crucified" (EPA). We live in the crony-capitalist system that Luigi Zingales describes so well. Live with it. Political freedom requires economic freedom, taught us Milton Friedman. You don't have the latter, don't expect the former.

This snarky but relevant and realistic advice is from University of Chicago Professor John H. Cochrane who writes that there won’t be much legislation due to a divided Congress, but that big or major changes will emanate from a labyrinth of executive orders and from the “metastatic expansion of regulation, let by ACA, Dodd-Frank, and EPA” which he explains in detail here

Philippine Corruption: Not Because Of Political Culture, But Due To State Capitalism

In watching the live coverage of the unfolding Libya unrest at the Al Jazeera.net, a news segment reported on the 25^th celebration of People’s Power revolution here, in the Philippines.

Al Jazeera interviewed a local political analyst who said that the People Power has not vanquished many of the deeply rooted deficiencies, primarily corruption, in the Philippine society mainly due to “political culture”.

This is a vivid example of misreading the effects as the cause.

Where the definition of Culture, according to wikipedia is “the set of shared attitudes, values, goals, and practices that characterizes an institution, organization or group”, this only means that what has been represented as “political culture” is actually the embedded incentives that has shaped “the set of shared attitudes, values, goals, and practices” of society.

Obviously, corruption as a culture didn’t emerge mainly from tradition or religion, but from arbitrary “noble sounding” anti-competitive and redistributive welfare laws which has underpinned the local political economic platform.

Given the social democratic ethos of the local society, where government has been romanticized as supposedly the nation’s “would be” saviour, and where the failure to attain government utopia has been attributed to the lack of virtuosity, then obviously, but unknown to many including the above expert, economic dependence based on non-price sensitive political distribution of resources only nurtures and feeds on corruption.

This is because society’s main energy have been directed towards lobbying, in order to secure politically granted economic rents, instead of competing to satisfy consumers via voluntary exchanges.

And that’s how corruption emerges—by determining society’s winners and the losers, the politically granted winners rewards or shares the rent with the political authorities.

So the maxim “it is NOT what you now but WHO you know” encapsulates the operating environment under the political culture of overregulation and patron-client based corruption or state/crony capitalism.

Thus the expectations of a virtuous government represents as no less than signs of ignorance of how the politics of violence has and will always be wielded. And that’s why we keep getting the same set of recycled leaders to the dismay of the many wrongheaded deluded idealists.

The only way to reconfigure “political culture” is NOT to elect or put to power a virtuous central planner, which is an illusion and a source of sustained frustrations, but to divert the energy or activities of the population from politics to productive voluntary exchanges.

We have to remember that governments comprise of human beings who suffers from the same flaws as everyone else, i.e. subject to personal biases, lack of knowledge, operates on preferred networks and comfort zones, has their own distinct and most likely flawed perception and interpretation of events and etc...

Importantly politicians and the bureaucrats are also self interested agents whom are subject to personal preferences and needs—career, self esteem or etc…

The only difference is that they have the mandate to use force over us.

So the power to control and the human aspect of supposed “public servants” makes them vulnerable to asymmetric (patron) exchanges with select economic clients.

Thereby the only way to eradicate corruption is by reducing dependence on political power as means to distribute economic opportunities, which alternatively also means expanding society’s reliance on the price based market system.

We can start with the junking of many of inequitable and protectionist laws and streamlining of the others.

In short, let the rule of law and respect of property rights prevail, culture will follow.

The Controversy Over Oil VAT (Visceral and Astigmatic Thinking)

``No government ever wants less government — that is, less of itself." Garet Garrett (1878–1954), Insatiable Government, American journalist and author

Populism is anything panacean.

Popular political demand has it that the lifting VAT on oil prices will provide relief to consumers.

No quibble on that- yes “automatic and short term relief” that is.

But, alas the thinking STOPS here!

Look at the table provided by ADB above (shown this last week).

It shows that Filipinos spends an insignificant 2.4% of their income on energy expenditures relative to the aggregate. This means food prices does more of the damage to household spending than energy/oil. It also means households are less sensitive (more inelastic) to price changes of fuel relative to food-and so is the reason why car sales remain buoyant instead of a retreat even under surging fuel costs.

In other words, given the accuracy of estimates in the table provided by ADB, what you see in the news reflects popular dissent over higher food prices than fuel. Thus, oil prices reflect more of the political dimensions (since it’s easy to pick on oil as a culprit knowing that this is PRIMARILY an external causality).

Will the magic wand of lifting VAT ease oil prices? Yes, as argued above-temporarily.

But economic logic tells us that lower prices INCREASES demand.

This means that if oil prices in the Philippines have not reached the threshold of “demand destruction”, increased demand will OFFSET any lowering of prices from the VAT suspension.

Essentially this brings us back to square one- High oil prices but with a gaping fiscal hole! What was deemed as a solution complicates the situation even more.

Hence, what then would be the next item to blame? Will the next political demand be "Nationalization"? (Hahaha!-Philippines import almost all of its crude oil requirements which should translate to a total havoc to the national balance sheets!)

One senator suggested that VAT be replaced with a hike in luxury items (particularly car sales). The honorable senator forgets the effects of high taxes on car sales: car smuggling or legal loopholes which has resulted to the recent brouhaha over “used” car imports from economic zones (see Diesel Roll Back For PGMA’s Sona, MV Princess of the Stars Tragedy, Economic Realities of Cagayan’s Used Car Trade).

Another venerable senator suggests "efficiency" in tax collection by curbing car smuggling. Wonderful, another ideal solution- yes (we agree)! But then again this is nothing new and has been a battlecry for almost every aspiring politician. Yet, such motherhood statements or grand nostrum of lack of “efficiency” goes back to the paradox of overregulation, legal loopholes and bureaucratic leakages and corruption.

So, in effect both Senators have been discussing solutions based on a chicken and egg perspective but don’t deal with the heart of the problem!

The principle of taxation basically is the funding of government expenditures (for whatever programs) derived from revenues levied from its constituents, us the taxpayers.

Rising government expenditures without the necessary funding will compel government to borrow and or print money which results to the deterioration of the national balance sheet or the fiscal deficit.

When government competes with or “crowds out” the private sector in raising money this raises the cost of money while at the same time reducing productivity which derails investments.

Over the longer horizon, if alternative options of borrowing and printing money under degenerating deficits become unsustainable, the government will again be forced to raise taxes furthering our economic agony of rising unemployment, lack of investments, higher cost of living and depreciating currency.

Yet beyond the public’s knowledge; the demand for “reckless” spending to accommodate populist causes could entail the risks of hyperinflation! You should look at the classic hyperinflation paradigm unfolding in Zimbabwe see The Race To Currency Destruction (Hyperinflation): Want to be a billionaire?

Tersely said, short term popular elixirs will only lead to longer term pain. A cure worse than the disease.

While everyone wants to be relieved of high oil prices and the burden of taxation, what people should realize is that cuts in taxes NEEDS TO BE ACCOMPANIED BY A CORRESPONDING DECREASE IN GOVERNMENT SPENDING.

What I am trying to say is that an abolition/suspension/moratorium of VAT should come with DECREASED spending and not shifting of burdens by imposing other taxes, which lead to more inefficiencies in the economy and avenues for more corruption.

None of our political officials have proffered such option because it takes away their inherent privileges of constituent dependency or the basic premise for their existence.

That’s why populism is almost always about intuition, vacuousness and immediate pacification instead of sound policies that ensures productive economic growth by accumulating capital.