Today the Manhattan Institute has published model legislation to allow real estate developers and builders to hire independent third parties to perform required permitting and inspecting for them.

"In perhaps no business is the phrase “time is money” truer than in development. The sector is heavily reliant on high-interest financing as well as materials and labor contracts that remain in place even if work stops. Delays by state or local governments in permitting or inspecting—which can happen at any time, from the review of initial building plans to the inspection of electrical installations—thus add extensive costs and uncertainty," the authors write.

This would not erode the government's functions, since, "such third parties would be required to use existing laws and regulations when evaluating projects. Third parties would also be responsible for any errors or mistakes—unlike governments, which often give themselves immunity for errors by building or other officials."

They point out that Texas and Florida, as well as some county-level jurisdictions, have implemented similar schemes.

This is as good a time as any for us to point out the existence of wonderful entities, which exist in the German-speaking world, called TÜV.

TÜV, or Technischer Überwachungsverein (Technical Inspection Association), traces its origins back to the mid-19th century during the Industrial Revolution. The rapid increase in steam engine usage led to frequent and catastrophic boiler explosions. In response, several boiler manufacturers got together and founded a membership-based non-profit association for the purpose of inspecting and certifying their boilers.

Over time these associations expanded and merged, becoming significant regional companies, such as TÜV Nord, TÜV Rheinland, and TÜV SÜD. They became multinational corporations offering a wide range of inspection, certification, and testing services across industries such as automotive, healthcare, energy, and consumer goods. Some TÜV have reincorporated as for-profit companies, but these companies are typically majority-owned by foundations with a charter to prioritize the company's mission over profits. The TÜV stamp or mark has become sought-after by companies as a badge of that German quality.

We love this because it seems like a potential solution to many problems raised by the thorny issue of regulation and inspection of products and services. The government, we know, can often be incompetent and/or captured by special interests. The problem with outsourcing the work to for-profit entities is obvious: the temptation to pay for good ratings is fierce. This is basically what happened with Arthur Andersen and Enron.

Cooperatives owned by the industry seem to provide a third option. They have a degree of accountability and flexibility from being outside the public sector. But they do not have the profit incentive to provide bad ratings.

Perhaps TÜV-like organizations are only possible in high-trust, consensus-driven cultures like those of the German-speaking world. In the much lower-trust world of Italy, in the wake of the Parmalat financial scandal, a much more low-trust system was introduced: a publicly-traded company's auditors were simply randomly assigned to it by lot from the list of eligible contractors for a fixed term.

Of course, the best approach to regulation remains the traditional French approach (which was essentially copied by Singapore): hire the best students from university into a cadre of civil service with a strong esprit de corps oriented toward public service, make their career rewarding, and let them do their job.

The point is this: regulation is a complex business, and it involves a lot more than "more" or "less", with the implication that "more" is always bad and "less" is always good. Getting regulation right also involves shaping the incentives of the people doing the regulation in the right way, and this is true whether they get their paycheck from a government or a private sector entity.

Policy News You Need To Know

#DeepState #FreeSpeech — The biggest recent news, of course, is the news about an NGO called the "Center for Countering Digital Hate" and its plans to "kill Elon Musk's Twitter." CCDH has close ties to the British Labour Party but also, apparently, to the Kamala Harris campaign. "Both the CCDH and Labour Together were founded by Morgan McSweeney, a Svengali credited with piloting Starmer’s rise to Downing Street, much as Karl Rove is credited with guiding George W. Bush to the White House. The CCDH documents carry particular importance because McSweeney’s Labour Together political operatives have been teaching election strategy to Kamala Harris and Tim Walz, leading Politico to call Labour and the Democrats 'sister parties,'" according to the report. Apparently, numerous British political advisers have been working on the Harris campaign (knowing a little about both UK and US politics, we cannot possibly imagine why anyone thought that was a good idea). Anyhow, much of CCDH's work seems to include lobbying and running campaigns to deplatform outlets and people they don't like. "The formula often involved collaborating with a mainstream media outlet to level an accusation of bigotry, followed by a pressure campaign against advertisers to shut off revenue to the target." The reason why this is important and goes beyond a politics or media or tech story is that the forces within the US government who want to silence speech they don't like have managed to find a way to get around the First Amendment and, apparently, US jurisdiction generally, by using NGO and other private sector go-betweens, as well as foreign operatives, to censor speech they don't like. This is simply unacceptable and unAmerican.

#BigTech — New documents allege that TikTok executives had full knowledge that the company's product is harmful to teens.

#PeakHigherEd — Freshman Enrollment Appears to Decline for the First Time Since 2020, the New York Times reports. You may believe that this is a good thing. However, part of the reason is the FAFSA application fiasco that we reported last year—as far as we know, no one at the Department of Education was fired over this. The other reason is demographics. Birth rates have dropped since 2008, and those cohorts are entering higher education now. Colleges believe they are stressed for cash but as enrollment declines for demographic reasons, it will get worse. Then choices will have to be made.

#Politics — Political analyst Ronald Brownstein has a good piece over at CNN (yes) on the parties' changing coalition. The buried lede is that Joe Biden seems to be the last figure of significance in the Democratic Party who had a "desire to hold onto the Democrats’ mid-20th century base of White working-class voters." Meanwhile, Harris, "the daughter of two academics herself," is a full believer into "the party’s modern identity as a coalition primarily of often economically struggling minorities and more comfortable college-educated suburbanites." McGovern really is getting his revenge. Coalitions also drive policy.

#Trade — Bob Lighthizer with a letter to the editors at the WSJ, pointing out that "when America created the largest economy in the world from the end of the Civil War until 1900, the average tariffs in this country were almost always above 40% on dutiable goods."