Summer 2022 Issue of Regulation A review is available Revitalizing Rationality: A Cost-Benefit Analysis to Save the Environment and Our Health Richard L. Revesz and Michael A. Livermore.
The Rebirth of Rationality It is a sort of sequel to the book they wrote on cost-benefit analyses. The Cost-Benefit Analysis of Rationality Can Help to Protect Our Environment and Health. Livermore & Revesz, in their first book, argued that cost-benefit analysis is a powerful tool for progressive government. The In The Rebirth of RationalityThe authors note the Obama Administration following their guidance and criticize Trump Administration for not using principled cost/benefit analysis to guide regulatory policy.
This is my first taste of the review.
Under Trump, Livermore and Revesz argue, “what is called cost–benefit analysis in a Republican administration is all but unrecognizable.” CBA no longer served as a way to make sure policymakers knew about possible regulatory consequences. Instead, it was used to create a system in which analysis were to be turned around to support specific policy conclusions.
According to them, the result was more than just the implementation of harmful and incoherent policies. It also involved an attack on “norms” in America’s governance system that had influenced and constrained agency decision-making. This, in turn demoralized federal employees. What is needed now, they argue, is an effort to “double‐down” on the Obama administration’s approach and go “even further to integrate cost–benefit analysis with a progressive regulatory agenda.”
Many of The Rebirth of Rationality is devoted to critiquing the Trump administration for its ill‐grounded and poorly executed deregulatory initiatives. The authors claim that many Trump actions had insufficient analysis and were not considered legal and procedural constraints. As a consequence, the administration lost early and often when its actions were challenged in federal court. The Environmental Protection Agency was particularly affected by these early court defeats and did not achieve any lasting changes, whether deregulatory.
They provide detailed criticisms on several Trump Administration initiatives. These critiques are often strong and persuasive. Their larger claims regarding the importance of CBA and regulatory review are not as powerful, and they are unlikely to convince those who don’t share their progressive regulatory outlook. While it is easy to criticize Trump for his disregard for administrative and legal rules governing agency activity, it’s another thing entirely. However, it is quite another thing to ignore concerns about aggregate regulatory burdens and suggest otherwise. Ex ante cost–benefit assessments should be the central focus of regulatory policy.
Let me conclude with this:
It is at its finest The Rebirth of Rationality identifies the potential value of sensible CBA and identifies many of the foibles of CBAs gone wrong. Livermore’s and Revesz’s thorough analyses of various Trump Administration regulatory actions is insightful even though they sometimes overstate the case.
At times, the authors seem to suggest CBA has more to offer than is actually realistic, and they too readily accept the argument that net economic benefits suggest there is a market failure that government must correct. These authors offer some hope that CBA could limit regulatory excesses within progressive governments. (Indeed, it is a shame, at this point, that neither author has been tapped to lead Biden’s OIRA.)
However The Rebirth of Rationality might not convince CBA’s fiercest critics, it is an important entry in the relevant literature. It firmly establishes Livermore and Revesz as the leading progressive advocates of cost–benefit analysis.