Here’s another reason to be cheerful: Barack Obama’s final days as President are taking a neoliberal turn.
- He’s just spoken out against planning regulations in America’s cities. This is a huge limit on growth – maybe bigger than in the UK. By constraining the supply of housing in places people want to live, like New York and San Francisco, and keeping people in less-productive places, building and zoning regulations are an significant drag on productivity growth – a recent NBER working paper estimated that the costs were equivalent to 13.5% of GDP lost every year. If you could cut those regulations to the level of the median US city, allowing more houses to be built and workers to move, you could boost US GDP by a whopping 9.5%. The "toolkit" of evidence and policy fixes he's released to help people fight back against NIMBYs is a great first step, and his bully pulpit could be even more effective at getting people to realise that blocking developments has a wider cost.
- He’s driving ahead with TPP and TTIP against strong opposition. I’m a big fan of these trade deals, which seek to reduce regulatory barriers to trade as well as tariffs. These are really important, because while the WTO requires member states not to put high tariffs on goods, they can be sneaky and protect their domestic firms from better foreign competition with regulation (stringent or time-consuming safety approval processes for things already sold safely in other countries, for example – the FDA does this a lot with drugs and medical instruments). In TPP, the biggest gainer will be the poorest country – Vietnam, and as Tyler Cowen writes it’s a good thing to attach many of the countries involved to the global liberal trading order.
- His White House issued a report last year attacking occupational licensing laws. In America 29% of jobs, including things like hair-braiding and interior design, require licenses that are often expensive or difficult to acquire. (Fourteen states require licenses to braid hair.) The laws seem bonkers, mostly. According to Ramesh Ponnuru, “more than 1,100 occupations are regulated in at least one state, but fewer than 60 are regulated in every state” – a sign that for almost all of them it’s possible to get by without, and a big barrier to migration between states, which helps people to find the right jobs for them (see point 1). We’re lucky in the UK that these aren’t as big of a problem as in America, although some I do suspect some licensed professions, like lawyers and black cabbies, of operating a bit of a racket.
I don’t think Mr Obama will be remembered as a great president, but we may miss him when he’s gone.