Despite pronouncements to the contrary, few intellectuals seem genuinely interested in "following the science": Too many have their careers, social status, and sense of personal identity wrapped up in perpetuating the status quo.

From The Next Phase of Regulatory Reform by James Broughel.  Provides additional information around the whole issue of regulatory burden which I posted about earlier today.  Lots of good points and useful discussion of regulatory capture.

Today, however, regulatory capture persists. The revolving door between Wall Street and financial regulatory agencies remains an ever-present problem. Presidents Joe Biden and Donald Trump both used executive fiats to raise or maintain import tariffs on items like solar panels and goods from China. The Jones Act, in place since 1920, continues to protect American shipping interests. Ethanol subsidies support the American corn industry but hurt the poor in developing countries. Even as the internet has started to democratize the public-comment process — which is the primary way the public can engage with proposed rules — it remains dominated by special-interest groups. As debates have grown ever more technical and arcane, the average man on the street has little chance of influencing regulatory policy.

Regulatory capture may be even worse at the state level. One 2017 study found that 85% of state occupational-licensing boards are required by law to consist of a majority of licensed professionals from the industry being regulated. Not surprisingly, these boards end up protecting incumbents and making it harder for would-be competitors — often blue-collar workers trying to get a leg up — to enter a profession. Regulatory capture has also morphed into new forms. Take "NIMBYism": When property owners lobby their local governments to establish zoning rules, historical-preservation laws, minimum lot-size requirements, parking restrictions, and similar regulations that limit building and development, they drive up property values. Just as with other forms of regulatory capture, these types of economic regulations restrict entry into the market so that a particular resource under special-interest control becomes increasingly scarce.

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Yandle's and Stigler's theories can be read as complementary to one another. Yandle's insight is, in some ways, an astute observation of something that should have been obvious: that regulations need coalitions of support behind them in order to become law. His theory offers a plausible explanation of how coalitions form to influence regulators, but it doesn't address the fact that the overall level of regulation in certain industries seems to rise unrelentingly year after year. This is where Stigler's capture theory is helpful. Firms typically resist new regulation attempts in order to avoid the corresponding compliance costs. However, once regulations are implemented, compliance costs are often sunk and cannot be recouped. Therefore, existing firms will often resist efforts to remove the very rules they initially fought against, since these regulations become barriers that stand between them and potential competitors who haven't yet paid the compliance costs. These dynamics all but ensure that there is no influential constituency to support removing regulations once they are enacted.

Yet Yandle's theory is better than Stigler's at explaining why the dominant form of regulation over the last 40 years has been social regulation. Capture theory would predict the opposite: that economic regulation would be dominant, as seemed to be the case in the 1970s. Experience since then, however, has shown that shamelessly self-interested economic regulation lacks a public-interest rationale, and therefore often fails to convince regulators and a skeptical public to favor the policy. Social regulations provide business interests with a useful public-interest cover.

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One example of such evidence-free regulation in recent years comes from the Department of Health and Human Services (HHS). In 2021, HHS repealed a rule enacted by the Trump administration that would have required the agency to periodically review its regulations for their impact on small businesses. The measure was known as the SUNSET rule because it would attach sunset provisions, or expiration dates, to department rules. If the agency failed to conduct a review, the regulation expired.

Ironically, in proposing to rescind the SUNSET rule, HHS argued that it would be too time consuming and burdensome for the agency to review all of its regulations. Citing almost no academic work in support of its proposed repeal — a reflection of the anti-consequentialism that animates so much contemporary regulatory policy — the agency effectively asserted that assessing the real-world consequences of its existing rules was far less pressing an issue than addressing the perceived problems of the day (by, of course, issuing more regulations).

Through its actions, HHS has rejected the very notion of having to review its own rules and assess whether they work. In fact, the suggestion that agencies review their regulations is an almost inexplicably divisive issue in Washington today. "Retrospective review" has become a dirty term, while cost-benefit analysis has morphed into a tool to judge intentions rather than predict real-world consequences. The shift highlights how far the modern administrative state has drifted from the rational, evidence-based system envisioned by the law-and-economics movement just a few decades ago.

In today's administrative state, intellectual fads appear to be in the driver's seat, while science and economics are simply along for the ride. Despite pronouncements to the contrary, few intellectuals seem genuinely interested in "following the science": Too many have their careers, social status, and sense of personal identity wrapped up in perpetuating the status quo.

Excellent piece.