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B-161740 1 (1978-12-19)

handle is hein.gao/gaobabjlk0001 and id is 1 raw text is: COMPTROLLER GENERAL OF THE UNITED STATES OFfK Z WA*!IINGTON, D.C. 20548 6 id B-161740 December 19, 1978 Mr. Robert C. Holland, President Committee for Economic Development 1700 K Street, N.W. Washington, D.C. 20006 Dear Bob: We have now had a chance to review CED's October 26 draft Improving Public Policy and the Market System in some detail. The body of the paper presents a well reasoned and well written argument--one that should make a valuable contribution to the current discussion of the appropriate relation- ship between the Federal Government and the economy. My general comments are contained in this letter. Specific points, dealing largely with matters of detail, are in the enclosed appendix and are being discussed in ongoing contacts at the working level between our staffs. I hope you find these comments helpful, and we are happy to assist in this important project in any way that we can. The draft reflects an inclination to recommend government intervention if, and only if, there is simultaneously a market failure and a clear demonstration that government action will effectively remedy that failure. We support regulatory reform and have furnished your staff with several of our reports and other material advocating less regulation. However, while consideration is also given to achieving desirable social goals, this side of the equation is given only limited attention in the draft. Some greater balance could be given to the report by adding some additional discussion about the benefits of regulation for workers, consumers, and society in general. One point concerning alternative policy instruments with which the government can achieve its goals struck me as somewhat unclear. On page 4, the draft says that ...using economic decisions as an indirect means of achieving social goals in the long-run (sic) is costly and inefficient. The draft then indicates a clear preference for direct rather than indirect government action. However, it is not clear to me what is considered in the report to be indirect as opposed to direct actions. The confusion is increased by a section in Chapter VI which discusses the advantages of indirect government actions and supports their use. The draft suggests creating financial incentives through taxes in order to control pollution rather than relying upon direct controls. 0 02 8 k3O

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