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Business-Managed Democracy

“Business-managed democracies are those in which the political and cultural arrangements are managed in the interests of business”

Sharon Beder

Business-Managed Environment

Cost-Benefit Analysis of Regulations

Despite the failure to get Senate approval for the Job Creation and Wage Enhancement, government agencies must undertake a full risk assessment and cost-benefit analysis (CBA) before any major rule can be introduced. In 2001 the Office of Management and Budget (OMB) advised federal agencies that it would evaluate proposed regulations with cost-benefit analysis.


CBA is used to attack environmental regulations. When new environmental regulations are being proposed, the industries affected tend to exaggerate their compliance costs and this influences government estimates of the cost of regulation. A 1997 study by the Economic Policy Institute of ‘all emission reduction regulations for which successive cost estimates’ were available, found that in 11 out of 12 cases the initial pollution-control cost estimates were double and often much more than double what the actual costs turned out to be.


A study by the Center for Progressive Reform in the US found that the Office of Management and Budget (OMB) had consistently used CBA to argue for less and weaker regulation.


Ackerman and Heinzerling in their book Priceless argue that CBA is in fact used to promote deregulation under the cover of scientific objectivity. They claim opponents attack environmental regulations as being uneconomic and use complicated and contrived economic analyses to discredit legislation, rather than publicly debating its merits.

The Institute for Policy Integrity (IPI) is a strong advocate of the use of cost-benefit analysis in evaluating regulations. It was formed in 2008 to "advocate for sound cost-benefit analysis at the state, national, and global levels".


In 2007 President George W. Bush signed an executive order that would place further obstacles in the way of regulation. It "gives presidential appointees in regulatory agencies increased 'gatekeeper' functions, requires agencies to specify in writing the market failures they hope new rules will solve, and calls for agencies to provide the Office of Management and Budget with information on certain guidance documents". It was revoked by President Barack Obama in 2009.

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