RALEIGH – Here’s another basic rule for interpreting political debate: if those who benefit from a given action don’t shoulder a substantial share of cost of that action, but receive its benefits, it will happen much more than it should.
You can apply this rule in a wide variety of situations. For example, it helps to explain why North Carolina’s public institutions of higher education are so inefficient – students and their families bear a relatively small share of the cost, which leads to excess demand, low graduation rates, and lots of wasted taxpayer money. Similarly, government subsidies for major “economic development” projects reduce the risk to business investors, which sounds like a good thing, except that the risk is merely transferred to taxpayers and leads to investments with a low likelihood of payoff, which is a bad thing.
In the legislative context, the rule helps to explain why it takes the General Assembly so long to do so little. Lawmakers, staffers, lobbyists, reporters, and other participants in the process are presented with thousands of bills a year to notice, read, study, and work on. While the vast majority of these bills might not be of interest to most people, it still takes some time to figure that out. And staff members have no choice. They have to devote their time and talents to drafting legislation that members say they want, no matter how trivial the subject, flawed the proposed response, or minimal the prospect of passage.
Mark Schreiner, a reporter for the Wilmington Star-News, has been keeping a close eye on the bill-drafting tally this year. He noted last week that the General Assembly staff has received more than 3,000 requests from House and Senate members to draft legislation, up 35 percent to date from the last legislative session. This works out to 18 bills per legislator.
It’s a classic example of what economists call an “externality.” The cost of drafting legislation is borne primarily by staff members, not lawmakers. Similarly, while a bill sponsor certainly faces some costs associated with trying to get the bill placed in a congenial committee and moving it through the process, most costs are borne by other affected parties such as state agencies and trade associations. They may have no role in deciding to stage a yearlong debate about an issue within their purview, but once a bill is filed they have little choice but to expend time and other resources to respond.
I have long been in favor of policies designed to internalize the sometimes-high cost of introducing legislation. Years ago, the North Carolina House adopted a cap the number of bills any legislator could introduce in a single legislative session. Unfortunately, the Senate didn’t go along, and the House rule was eventually overturned.
It needs to return in some form. My argument then was that the state should borrow concepts and terminology from environmental protection in an effort to control the flow of noxious emissions – bad laws – emanating from Jones Street. Consider the concept of “cap and trade.” It is based on the idea that the public good may be served by limiting the total amount of, say, sulfur dioxide emitted in a particular region, but that it is impossible for regulators to know precisely which emissions are the most inefficient – that is, which impose the most harm to public health or property at a given level of public benefit, such as units of transportation or industrial production. Therefore, cap-and-trade programs set an overall limit on emissions, translate that into valid permits for each emitter, and then allow the permits to be bought and sold on the market. Those firms assigning a higher value to being able to emit then have a financial incentive to acquire more of the scarce permits, while others have a strong financial incentive to conserve energy and reduce emissions so their excess permits can be sold. You get the desired emission reduction at the lowest possible cost.
Applying the model to Jones Street emissions means junking the part about buying and selling legislation (insert your favorite Jim Black criminal conspiracy joke here). But the trade part of cap-and-trade still makes sense. If each legislator received an allocation of, say, two permits for statewide bills and two permits for local bills, she wouldn’t have to use all four. She could allow a fellow lawmaker with more than four good ideas – a rare breed, I’d say, but let’s use our imaginations – to use one of her allotments, perhaps in exchange for support for one of her own bills she’d really like to get passed.
Capping the number of bills would make it more likely that legislative, political, and journalistic resources would be expended on the most-important pieces of potential legislation. All in favor, please say “aye.”
Hood is president of the John Locke Foundation.