This report should stimulate the demand for economists! If you read the main report, take a look at page 25. In a nutshell, this report wants California to hire a “Cass Sunstein” as our regulatory czar. If regulators anticipated that a wise man such as Mr. Sunstein (or Dr. Kahn?) will be taking a close look at the regulations that are proposed, they would be more likely to only propose cost effective regulation. If California had a consistent and logical process for evaluating the economic consequences of its regulations, then we would make “better” decisions and some Republicans might be more pro-intervention.
My hope is that such a change in the “rules of the game” would lead regulators to be pro-active in considering both the costs and benefits of the regulations they are proposing and to anticipate any nasty unintended consequences. I want to see greater regulator honesty about the “known unknowns” when new regulations (such as California’s AB32) are rolled out. We need to encourage pilot programs and running experiments to help regulators learn about what works and doesn’t work in the real world.