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No more secret science, needs no more secret economics

By Darren Nelson - posted Wednesday, 9 May 2018

Controversial Administrator at the Environmental Protection Agency (EPA), Scott Pruitt, said in a press release on April 24th that: "The era of secret science at [the] EPA is coming to an end." This is in the context of him signing a proposed rule to strengthen the science used in regulations issued by EPA. This is also in the context of Executive Order 13777 (issued in March 2017) which provides for regulatory reform of "those regulations that [do not] meet the standard of reproducibility." The press release also stated:

The rule will ensure that the regulatory science underlying Agency actions is fully transparent, and that underlying scientific information is publicly available in a manner sufficient for independent validation. This proposed rule is in line with the scientific community's moves toward increased data sharing to address the 'replication crisis'-a growing recognition that a significant proportion of published research may not be reproducible.

Or, in the words of the independent National Academy of Scholars (NAS), there is an "Irreproducibility Crisis of Modern Science". That is the title of their new report. The sub-title is "Causes, Consequences, and the Road to Reform". This report was launched in Washington DC on April 17th by Representative Lamar Smith (R-TX), who is the Chairman of the House Committee on Science, Space, and Technology.


The Pruitt press release on the new rule to "stop secret science" also highlighted the impact of EPA regulations on the economy and thus the importance of cost benefit analysis (CBA). Regarding the economy, it said: "To apply the same standards to research that EPA says justify regulations affecting billions of dollars in economic activity and millions of human lives is essential for those regulations to truly be scientifically based." Regarding CBA and in reference to Executive Order 13783 (also issued in March 2017), it stated:

It is the policy of the United States that necessary and appropriate environmental regulations comply with the law, are of greater benefit than cost, when permissible, achieve environmental improvements for the American people, and are developed through transparent processes that employ the best available peer-reviewed science and economics.

My previous piece in Townhall Finance, entitled "The Blue Wave is Questionable: Why That's Good For American Competitiveness", mentioned CBA a few times in my appeal to President Trump for an "American Competition Policy" (including still fewer regulations and lower taxation). I also wrote that, this national policy to "make competition great again" in America, should be guided by the following principles:

#1) allowing for as much competition as possible;

#2) allowing for as much private sector as possible;

#3) allowing for as much government decentralisation as possible, from federal to state to local; and


#4) subjecting all significant expenditure of taxpayers' money to CBA, including a "blue team versus red team" approach.

I devote two chapters, in my new book of the "Ten Principles of Regulation and Reform", to CBA and the related concept of comparative risk assessment (CRA). They are both akin to two familiar tools in the world of finance – ie asset valuation and risk management, respectively. As I wrote in this book:

CBA is a practical microeconomics method and frame-of-mind for better informing government policy (eg economic, social and environmental) decisions regarding net benefits or costs. The key to CBA is identifying and quantifying all of the relevant impacts of a given policy or investment (versus other scarce choices) as both benefits and costs, from one or more viewpoints, in terms of money and discounted for time.

CRA is a systematic process to estimate the level of risk related to some specific action or activity. It is commonly applied to a wide variety of human endeavours in which harm to people, the environment or economic interests might occur. [CRA] typically take[s] the shape of a ranked list with some issues identified as posing higher risks than others.

One of the most famous and serious attempted applications of a proper CBA system came in February 1981 as a result of Executive Order 12291 by President Ronald Reagan. Amongst other things, it aimed to: reduce the burdens of existing and future regulations; increase agency accountability for regulatory actions; provide for presidential oversight of the regulatory process; minimize duplication and conflict of regulations; and insure well-reasoned regulations. The process included regulatory agencies submitting proposed major regulations to the Office of Information and Regulatory Affairs (OIRA). In Australia, the federal Office of Best Practice Regulation (OBPR) uses a combination of CBA, regulatory impact statements and a business cost calculator.

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This article was first published by Townhall Finance.

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About the Author

Darren Brady Nelson is an Austrian School economist, conservative-libertarian and Christian who lives in Brisbane Queensland but is originally from Milwaukee Wisconsin.

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