Thursday, August 11, 2011

Public Policy and Shadow Public Policy?

When one considers recent public policy they think of TARP, the stimulus plan, ninety-nine weeks of extended unemployment benefits, Dodd-Frank banking regulation, cash for clunkers, etc.. One should not forget the present public policy and their architects present the entire cabal of recent public policy as in fact being times some multiplier of Keynesian foolishness.

One needs to further consider this statement by Michael Farr [paraphrasing]: "If you pump multiple trillions of dollars of stimulus into a dead horse, even the dead horse will get up and do a couple lapses  around the track". However, intuitive became the counter intuitive as the dead horse remained stone cold dead.

Plenty of factors are at work. Expectations set by anti-business rhetoric, the fact that Keynesian stimulus has never worked as advertised, mountains of federal, state, and local debt, etc., etc.. However, one factor that needs examined is a second public policy that exists known as shadow public policy. Shadow public policy are those separate and distinct policies put forth and enacted by non-elected officials, that is, bureaucrats of regulating agencies.

How can non-elected officials create public policy? The two major ways non-elected officials create public policy are when lawmakers create skeleton legislation leaving the bureaucrats to fill in the blanks or when bureaucrats interpret regulation given their own particular ideology or political pay backs to rent seekers [special interests].

What are some examples? Stealth gun control through firearm dealer having to report multiple sales, the justice department crafting rulings on gun rights, right to work rulings and the infamous Boeing's freedom to locate in South Carolina case orchestrated by the Nation Labor Relations Board. Other examples regard boarder enforcement, the EPA and Army Corps of Engineers attempting to preempt private property rights regarding water rights, and the EPA creating arbitrary rules such as those regarding coal mining. The list goes on and on.

The odd item is that public policy can find its aim being deflected by shadow public policy. For example, any attempt to jump start the economy through questionable Keynesian policy becomes cancelled out by over regulation of firms, the cost of over regulation to the firm, and the over regulation causing a negative expectation by firms. An ever odder item is that the politicos in power are in fact producing directly or indirectly the shadow public policy that cancels out the effects of their public policy. That is, politicos in power are creating both sets of policies and hence manage to cancel out the overt policy by the covert policy.

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