10/05/16 Research Series - David Gerard: “The Economics of Regulation and Antitrust in the Era of Homeland Security”

The attacks of September 11, 2001 prompted a fundamental reorganization of the US federal administrative state, with homeland security now accounting for over 40 percent of regulatory spending and 50 percent of regulatory agency staffing (Dudley & Warren, 2016). The massive expansion of security concerns presents formidable challenges for economic policy analysis. It is difficult to assess and prioritize risk-reduction strategies, and benefit-cost analysis of security-related regulations has proven to be exceptionally challenging. Nonetheless, security concerns are now “inextricably intertwined” with many economic and social regulations (e.g., risk regulation at nuclear facilities and oil platforms). This paper provides an analytical narrative of the evolution of the history of the federal regulatory state, focusing on the changes brought about by the expansion of homeland security regulations. Next, it proposes research to understand the nature and consequences of these institutional changes, including the claim that these changes have undermined the legacy missions of many federal agencies.