By Inimai M. Chettiar
We don’t yet know who will win the White House on November 4th. But what we do know is that the next administration will need to deal with a triplet of crises in the economy, environment, and energy. We’re watching the upward tick of the cost of a gallon of gas, the downward spiral of our economy, and the steady march towards 390 parts per million of carbon dioxide in our atmosphere. Any one of these issues could make for a disaster. But as the three fronts converge, what we have is the perfect storm.
Our next President will have to guide us through these waters – and in order to do so, he’ll need some powerful tools. These problems will not be solved by nibbling around the edges with piecemeal policies. We’ll need to look to cross-cutting, innovative and holistic approaches – and that will probably mean government regulation.
If we can learn one thing from the collapse on Wall Street, it’s that sometimes we need regulation . . . and sometimes too little oversight is as dangerous as too much. The key for the new administration in taking on this trifecta of economic, environmental, and energy crises will be finding the balance. We will need to institute new regulations that address all three in a way that minimizes the negative effects on each one..
In our new policy brief called “Cost-Benefit Compass,” the Institute for Policy Integrity suggests a way to begin doing that. Cost-benefit analysis is a central tool used to evaluate regulation, and decide when to regulate and when not to. The only way we can achieve successful regulatory solutions is to give cost-benefit analysis a facelift.
When President Regan mandated the study of the economic pros and cons of significant regulation, he did so in a way that allowed the process to be corrupted by industry and other anti-regulatory interests. What we have now is a skewed system that overestimates the costs of regulating and undervalues the benefits of doing so.
As the storm clouds gather on our three current crises, this is no way of doing business. We’re not going to be able to institute the kinds of changes we need if we’re not being honest about the costs and benefits of government action (or inaction). To only assess countervailing risks, and not look at ancillary benefits of a proposed regulation is to create an imbalanced outcome. And when government discountsthe benefits for future generations, it tells us that our children and grandchildren are worth less than we are.
One of the biggest failures in the way cost-benefit analysis is conducted is that there is no requirement to test government inaction. Deregulation is not scrutinized. We’re lamenting the gutting of the Glass-Steagall Act in hindsight but shouldn’t we learn from that error and put in a stop gap that reviews that kind of deregulation and inaction?
These and other glitches in the current cost-benefit system are drastically throwing off the calculations. Our next President should correct this imbalance. Doing so will give him a stronger tool that will produce better regulation and help navigate us out of the storm. Failing to do so upholds the status-quo that got us where we are and threatens our ability to solve the crises on our hands.
A healthy economy, a clean environment and a sensible energy policy are not competing goals. In fact, if we work to find solutions that make them mutually reinforcing, we will be in a stronger position as a nation then we have been in quite some time.
Inimai M. Chettiar joined the Institute for Policy Integrity as a Legal Fellow in August 2008. From 2003 to 2008, Ms. Chettiar was a Litigation Associate at the New York office of Debevoise & Plimpton LLP, where she lead litigation teams in complex securities investigations while also pursuing groundbreaking pro-bono work challenging government warrantless wiretapping, supporting the constitutionality of federal voting rights bills, and enforcing the Geneva Convention rights of non-citizen defendants in U.S. courts. Ms. Chettiar also served as a judicial clerk for the Honorable Lawrence M. McKenna at the U.S. District Court for the Southern District of New York. Ms. Chettiar graduated cum laude from the University of Chicago Law School in 2003, where she was Comments Editor for The University of Chicago Law Review. She received her B.A. cum laude from Georgetown University in 1998. From 1998 to 2000, Ms. Chettiar worked in the Honors Program of the U.S. Department of Justice Antitrust Division’s Appellate Section in Washington, D.C. Ms. Chettiar is the author of Contraceptive Coverage Laws: Eliminating Gender Discrimination or Infringing on Religious Liberties?, published in The University of Chicago Law Review.