Regulating the Regulators Reforming Federal Regulation

First we had market failure; so we tried regulating markets. Then we had regulatory failure; so we tried reforming regulation. Now, it seems, we have "reform failure." That, at least, is the message of a recent book on regulatory reform written by Robert Litan and William Nordhaus, based on their experience as "watchdogs of the regulatory process" in President Carter's Council of Economic Advisors.' Reforming Federal Regulation argues that, despite its promise, regulation has failed to cure market failure and that the reforms attempted to date have failed to cure regulatory failure. But, say Litan and Nordhaus, there is hope-the reform agenda is not yet exhausted. The problem with regulatory reformers, like regulators themselves, is the insufficient grandeur of their vision. Regulatory reform has had too narrow a scope. What is needed, the authors maintain, is the establishment of a "centralized process for coordinating regulation to parallel that of expenditures . ,, Congress must set a "budget" for all major regulatory activities "so that scarce national resources would be channeled first toward meeting the problems of greatest importance." 3 Reforming Federal Regulation, then, pushes the visible-hand logic of regulation to its outermost limit-proposing to subject the many visible hands of industrial or topical regulation to an omnipo-