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Monday, July 30, 2007

The "Yellow Pages" Test

Congressman Tom Feeney (R-FL) has put forth simple criteria for determining whether or not Congress should pass new regulations or not.
The Laffer Curve, game theory and the classic supply-and-demand diagram are all well established in the economics lexicon.

Less well-known, but arguably more valuable to some House Republicans, is a new economics theory dubbed the “Yellow Pages test.” House Financial Services member Tom Feeney, R-Fla., says he uses the test to determine whether the federal government needs to regulate or be involved in a certain business.

If he can find at least two businesses listed in the Yellow Pages that offer a similar service, Feeney says, then the federal government should steer clear. Fellow conservative and Financial Services member Jeb Hensarling, R-Texas, who actually coined the term “Yellow Pages test” at a hearing last week, agrees.

The government has no business messing around in the private market, Hensarling argued, suggesting that the test ought to be used often.

This advance in economic theory was offered during a committee debate over federal regulation of wind insurance coverage. If it can be applied to wind insurance brokers, one can easily see its extension to other facets of the business world.

As evidenced by the now notorious “D.C. Madam” case, local governments might want to reconsider, for example, whether to interfere with the escort business since there are plenty of those listed in the phone book — all providing, one presumes, a similar service.

Zing! I would also note that many of California's medical marijuana dispensaries are listed in the phone book, but that didn't stop Rep. Feeney or Rep. Hensarling from voting against an amendment last week that would have stopped the federal government from messing around in that private market.

Via Congressional Quarterly (sorry, subscription required).

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