New Research on Red Tape, Regulatory Reform, Subsidies, and the Future for US-UK Trade

New Mercatus research from the week of Jan 24 - Feb 2

Cutting Red Tape to Cut the Deficit

James Broughel and Jack Salmon | Policy Brief

In their recent policy brief, senior research fellow James Broughel and research assistant Jack Salmon outline a pragmatic roadmap for reducing the budget deficit by cutting red tape. Several regulatory reforms could begin to improve the fiscal position of the United States. 

They detail the effects regulations have on the government’s budget directly, suggest placing limits on the amount of regulation, and recommend mandating sunset provisions for all new regulations. Overall, regulatory reform is one option in increasing economic growth, and an important one at that. 

Nebraska Could Be a Leader in Regulatory Reporting

James Broughel | State Testimony

In his recent testimony before the Nebraska Legislature, Mercatus senior research fellow James Broughel discusses regulatory reform and Legislative Bill 857 (LB857), which is currently being considered by this committee. He notes that while Nebraska is taking important steps toward ensuring regular review of regulations, further reforms will be needed in order to guarantee that reviews are substantive. Specifically, moving timelines up, extending reviews to all existing regulations, and beefing up reporting requirements could make Nebraska a leader in regulatory reporting, which other states would be wise to emulate.

Fail or Flourish: American Workers, Globalization, and Automation

Daniel Griswold | Research Paper 

The conventional narrative states that most American workers are falling behind and that trade and technology share most of the blame. To address this situation, some policymakers on the right and on the left are calling for increased taxes, tariffs, and regulation. Daniel Griswold rejects both the conventional narrative and the proposed solutions. In “Fail or Flourish: American Workers, Globalization, and Automation,” he argues that most workers are actually getting ahead, and there are better ways to help those who are not.

Understanding Why Economic Development Subsidies Are a Problem and What Can Be Done about Them

Michael D. Farren | State Testimony

In his recent state testimony to the Vermont House Committee on Ways and Means and Senate Committee on Finance, research fellow Michael D. Farren illustrates why economic development subsidies are a problem, why they remain a problem despite growing agreement that they should be phased out, and what opportunities exist for unilateral and multilateral solutions.

Academic research shows that economic development subsidies generally don’t succeed in achieving their stated goals. Farren lays out the analyses that keep policymakers pursuing these subsidies and discusses negative economic effects while looking ahead at opportunities for reform. 

Using an Interstate Compact to Solve the Problems with Economic Development Subsidies

Michael D. Farren | State Testimony 

The problem of economic development subsides existed before the American founding and unfortunately has worsened in recent decades. The broad body of academic research clearly shows that, contrary to the claims made by consultants, instead of enhancing economic development, subsidies are more likely to reduce it.

There is widespread public misunderstanding of subsidies, and as a result, policymakers face strong incentives to continue offering them. This divergence between what is economically efficient and what is politically expedient keeps policymakers trapped in a self-destructive subsidy war.

An interstate compact offers a politically feasible long-term solution. Policymakers would be wise to explore the opportunity, because real economic development depends on it.

Can a US-UK Trade Agreement Become a Reality in 2021?

Daniel Griswold and Jack Salmon | Policy Brief

When the bells peal in the United Kingdom on Friday to officially mark its “Brexit,” it will also sound the opening bell for that nation and the United States to begin bilateral trade negotiations.

The US and UK have long been in talks on this ambitious trade agreement which would present a new set of challenges as well as benefits. Not only would these negotiations be economically important, politically feasible and practically achievable, but it would also offer both countries the opportunity to lower barriers to trade that have been long neglected in important sectors. 

In their new research paper, Daniel Griswold and Jack Salmon explore the terms as well as the timeline of the US-UK agreement, diving in on the opportunities, challenges, and significance of this new possibility for transatlantic trade.