The Supreme Court just sabotaged the US economy
Innovators, businesses, workers, and consumers will bear the costs of the court’s reversal of the four-decade-old ‘Chevron deference’ doctrine
CONTRARY to conventional wisdom, the US Supreme Court’s reversal of the four-decade-old “Chevron deference” doctrine is potentially one of its most anti-business rulings yet. The damage to companies – especially highly innovative firms – could be profound, with serious long-term consequences for the US economy.
In essence, the recent decision in Loper Bright Enterprises versus Raimondo means that when Congress has been either silent or ambiguous on specific rules to enforce a statute, courts need no longer defer to executive-branch agencies’ interpretation of that statute. This may sound arcane, but the real-world effect is dramatic. Courts, rather than regulators, will now be the final rule-makers in the United States on everything from drug approvals and transportation regulations to food safety – all without the requisite scientific and domain expertise.
Before this ruling, most US companies could simultaneously launch new products in all 50 states. The sheer size of this market, combined with a uniform set of regulations, created enormous economies of scale and allowed for an efficient allocation of capital. It is one reason why the US became such a powerful magnet for innovators.
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