A Hippocratic Oath for Policy Makers

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A Hippocratic Oathfor Policy Makers

• Robert W. Hahn
• Executive Director
• AEI Brookings Joint Center for Regulatory
  Studies

Presented at the PRI Conference Regulating
Wireless in California Bill of Rights or
Wrongs? San Francisco, CA April 15, 2003
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Roadmap

• Make three observations about regulation
• Offer a paradigm that embraces the Hippocratic
  Oath
• Applies to Wireless

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1. Economic Regulation of Competitive Markets
Reduces Economic Welfare

• Price and Entry regulation in competitive markets
  has been a failure
• Airline, railroad, and trucking regulations led
  to price distortions
• After transportation industries deregulated,
  estimates of annual consumer benefits between 35
  and 40 billion (in 1990)
• lower prices and better service
• Similarly, wireless regulation is unlikely to
  help consumers

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2. Government Intervention Can Have Unintended
Consequences

• Example taxation policies have equity
  implications
• Taxes raise prices consumers face, lower demand
• High wireless taxes (CA wireless taxes exceed
  19) could adversely affect low income customers
• Regulating wireless service terms will lead to
  unplanned effects

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3. The Perfect Is the Enemy of the Good

• Regulation frequently strives for perfection
• Man is Imperfect, there are going to be
  complaints
• Cost of fixing last complaint likely to far
  exceed benefits

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A Policy Paradigm
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A Hippocratic Oath forPolicy Makers

• Dont intervene if you dont have a good reason
• If you do intervene, try to do more good than
  harm

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Robert W. Hahn Executive Director AEI Brookings
Joint Center for Regulatory Studies
1150 17th Street, NW Washington, DC 20036 Phone
202.862.5909 Fax [phone]