Trump’s comments on Google show true attitude toward regulation

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Last week, President Donald Trump tweeted his unhappiness that Google search results seemed to be favoring sources critical of the president. His chief economic adviser suggested that the administration “is taking a look at whether Google searches should be regulated.”

This is the same administration that has continuously touted its record on deregulation. Trump claimed in December that his administration had repealed 22 regulations for every new one it has issued (a claim that has since been debunked). Nearly every time that President Trump brags about the economy, he cites the tax bill passed last year and deregulation. Why all of a sudden is he so eager to regulate one of the major drivers of the good economy, the technology sector?

{mosads}There are sound reasons to oppose regulation in some areas and support it in others. Economists talk about regulating only when there are market failures such as sellers having more information about a product than buyers or externalities such as pollution. This can be extended to the principle adopted by the last five presidents that regulation should only occur when the costs of a regulation are justified by its benefits. Or one can argue that regulations should be used to redistribute resources in a way that improves the well-being of the least fortunate.

Trump’s (and Kudlow’s) argument that the government should regulate Google search results passes none of these tests. There is no market failure here (although there are valid arguments about Google’s monopoly power, these have to do with suppressing competition, not political bias). There has been no economic analysis showing that the benefits of regulating the political slant of Google search results outweigh the costs of doing so. And as besieged as the President may feel, there is no argument that he is among the least fortunate.

Add to all of that the likely first amendment implications of the government dictating which search results should appear at the top of a Google search, and the case for regulation actually cuts against everything else the administration has said about regulation. It’s a classic example of government intervention in a sector of the economy where there is no reason to intervene and the harms are likely to far outweigh the benefits.

Instead the lesson one must draw from these comments is that the Trump administration sees regulation not in any objective terms but as a way to punish opponents and reward supporters. This should shape the way all of their efforts in the regulatory arena are viewed.

Eliminating environmental regulations should thus be seen not as improving economic efficiency but rather as rewarding supporters such as the coal industry and voters in states where the coal industry is prominent. Deregulating the financial sector is not about removing shackles on a financial industry that is in fact already thriving, but rather an attempt to curry favor with the wealthiest donors. Viewing the administration’s regulatory initiatives in this way is not only consistent with the comments about Google but also the fact that many of these deregulatory initiatives fail a cost-benefit test.

Trump’s actions harm the cause of rational regulation and deregulation. If regulation is just another tool for the all-powerful government to reward and punish, then both public opinion about regulation and the empirical case for whether to regulate are meaningless. Presidents of both parties have worked over the past 40 years to improve the legitimacy and the content of regulation. That work took decades of effort. Arguing that Google should be regulated because you don’t like their search results is the type of action that has the potential to undo much of that work in a heartbeat.

Stuart Shapiro is professor and director of the Public Policy Program at the Bloustein School of Planning and Public Policy at Rutgers University, and a member of the Scholars Strategy Network. Follow him on Twitter @shapiro_stuart.

Tags Cost–benefit analysis Deregulation Donald Trump Economics of regulation Presidency of Donald Trump

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