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Reforming Hazardous Waste Policy

via Analysis
Tuesday, June 1, 1999

Hazardous waste regulation in the United States under the Resource Conservation and Recovery Act has several significant problems. The regulations prioritize risks poorly, failing to set tougher standards for more-hazardous wastes. They have forced firms to spend billions of dollars on diverting waste from disposal on land, without convincing evidence of high health and environmental benefits. Finally, because the regulations raise the cost of legally managing wastes, they may encourage illegal dumping of wastes and thus actually hurt the environment more than they help it.

The program needs fundamental reform. Such reforms would relax the regulations and rely more on economic incentives. Setting up these incentives, however, requires some thought. Hazardous waste policy addresses a wide variety of substances, and its environmental effects depend on how facilities manage their wastes. Thus, traditional incentive policies, such as "green" taxes, must be tailored for this purpose. Taxes should be levied not on the wastes themselves but on the environmental releases from waste management facilities. These taxes would decentralize decisions and, perhaps more important, more clearly link the policy to its environmental goals. A modified deposit/refund (similar to bottle bills) could have similar benefits and would eliminate the policy's incentives for illegal disposal.

The Economic Effects of the Liability System

by Daniel P. Kesslervia Analysis
Tuesday, June 1, 1999

Liability law has two principal objectives: compensation of parties injured in accidents and deterrence of negligent behavior of potential injurers. Considerable evidence, however, suggests that the current liability system in the United States achieves neither. The system has high transaction costs and fails to compensate injured parties appropriately. There is evidence that liability pressure has distorted firms' incentives for innovation. In the health care sector, liability pressure has led to defensive medicine--precautionary treatments with minimal medical benefit administered out of fear of legal liability.

This essay summarizes recent empirical research on the economic effects of liability-reducing reforms to tort law. The strategy of this research is to compare time trends in economic outcomes from states that adopted law reforms with trends in outcomes from states that did not, controlling for other determinants of the outcomes in question. Differences in trends between the two types of states provide an estimate of the effect of the reforms.

In general, this research suggests that reductions in the level of liability improve productive efficiency. But even if these studied reforms improve efficiency, they may not improve the performance of the system in terms of the compensation goal. The essay concludes with a discussion of the potential effects of a wide range of largely untried reforms to the liability system, some advocating radical changes to the allocation of responsibility for accidental injuries, that seek to address both compensation and deterrence goals.


by David Brooksvia Policy Review
Tuesday, June 1, 1999

David Brooks on The Great Disruption by Francis Fukuyama Holman W. Jenkins Jr. on The Lexus and the Olive Tree by Thomas L. Friedman Tod Lindberg on Black Hawk Down by Mark Bowden

Lessons our 401(k)s Taught us

by Dave Mastiovia Policy Review
Tuesday, June 1, 1999

How much do Americans know about investing for retirement?

Welfare for the Well-Off: How Business Subsidies Fleece Taxpayers

via Analysis
Saturday, May 1, 1999

Federal subsidies to U.S. businesses now cost American taxpayers nearly $100 billion a year. If all corporate welfare programs were eliminated, Congress would have enough money to entirely eliminate the capital gains tax and the death tax. Alternatively, Congress could cut the personal and corporate income tax by 10 percent across the board. Either of these alternatives would do far more to enhance the competitiveness of U.S. industry than the current industrial policy approach of trying to help American companies one at a time.

Federal subsidies to corporate America take many forms: direct grant payments, below-market insurance, direct loans and loan guarantees, trade protection, contracts for unneeded activities, and unjustified special interest loopholes in the tax code. Despite their promises to downsize government, congressional Republicans have retreated from any serious attempt to reduce business subsidies. The Clinton administration has routinely requested budgetary increases for corporate handouts, including the Export Import Bank, the Overseas Private Investment Corporation, and the Commerce Department's Advanced Technology Program.

This study refutes common myths about corporate welfare programs: that they create jobs and promote growth; that they =`level the playing field=' with our foreign competitors; that they help small businesses; and that the payments are provided without regard to political considerations. The main effects of industrial policy programs are to undermine the free enterprise system and corrupt the political system. Congress should get businesses off the dole and use the savings to cut taxes, reduce the national debt or both.

Surplus on the Surface, Trouble Underneath

by Peter Brimelowvia Hoover Digest
Friday, April 30, 1999

Beneath the budget surplus lies a grabby tax collector—and federal spending that is still going up. By Hoover media fellow Peter Brimelow.

A Continent out to Lunch

by Gary S. Beckervia Hoover Digest
Friday, April 30, 1999

Europe’s chronic unemployment is a problem of Europe’s own making. Nobel laureate and Hoover fellow Gary S. Becker explains.

Flying Friendlier Skies

by John E. Robsonvia Hoover Digest
Friday, April 30, 1999

In an earlier life, Hoover fellow John E. Robson helped to deregulate the American airline industry. The industry has flourished ever since. Yet the industry’s very success has prompted calls for reregulation, to Robson’s considerable chagrin. How deregulation worked—and why reregulation wouldn’t.

Black History Lesson

by Thomas Sowellvia Hoover Digest
Friday, April 30, 1999

Hoover fellow Thomas Sowell on a generation of policies that have done black Americans far more harm than good.

Environmental Law 101

by Richard A. Epsteinvia Hoover Digest
Friday, April 30, 1999

The best way to protect the environment? Consult common sense—and common law. By legal scholar Richard A. Epstein.


Economic Policy Working Group

The Working Group on Economic Policy brings together experts on economic and financial policy to study key developments in the U.S. and global economies, examine their interactions, and develop specific policy proposals.

Milton and Rose Friedman: An Uncommon Couple