Reinventing Rationality: The Role of Regulatory Analysis in the Federal Bureaucracy.

Reinventing Rationality is an examination of the use of cost-benefit analysis to control regulatory rulemaking during the Reagan Administration. Using a legal approach, McGarity presents five case studies of cost-benefit analysis applied to proposed rules, assesses several ways to structure regulatory analysis, and proposes ways to make regulatory analysis more effective. McGarity considers cost-benefit analysis a major reform, contending that it will replace an incremental bureaucratic decisionmaking approach with a more synoptic rational analysis capable of producing better decisions. Unfortunately, these conclusions are not supported by the case studies which illustrate that the primary use of cost-benefit analysis was to justify policy decision rather than analyze options.

Given the already extensive literature on regulatory analysis during the Reagan administration, what can a specialist in regulatory policy glean from Reinventing Rationality? The five case studies of lead limits in gasoline, air quality standards for particulates, automobile driver's vision obstructions, mechanically deboned meat, and notification for workplace hazards are detailed descriptions of the politics of rule adoption. The conflicts in the agencies between program advocates and the analytical staff are presented well. The intervention of the Office of Management and Budget is documented, providing some visibility to an often invisible process. Students of public administration might also be interested in the five models McGarity describes for organizing regulatory analysis.

For the most part, however, regulatory scholars will find little they did not already know about regulatory analysis. The strengths and weaknesses of cost-benefit analysis have appeared in the literature several times. In fact, much of McGarity's discussion is reminiscent of the program planning and budgeting systems debate from the 1960s. Prescriptions for reform--clearly stating assumptions behind the analysis, limiting the scope of the analysis, involving the analysts early in the rulemaking process, providing open access to information, and communicating on the record--might make regulatory analysis slightly better, but they fail to address some fundamental problems of cost-benefit analysis as it is currently practiced. Despite several examples of poorly estimated costs and a lack of information of benefits, little attention is paid to how these basic elements in regulatory analysis could be attained.

Perhaps most disappointing is the failure of McGarity to recognize that regulatory reform to the Reagan administration simply meant less regulation not more rational regulation. Even though the author recognizes the deregulatory agenda of the president, he fails to understand that little classic cost-benefit analysis (which is described in glowing terms in the book) was actually undertaken. When politics appears to drive a policy process, it is extremely difficult to convince people that cost-benefit analysis during the Reagan administration was a reform designed to improve the rationality of regulation.

Kenneth J. Meier
University of Wisconsin-Milwaukee