"Evils of Regulation" is the Wrong Answer to a Trick Question
Here’s a trick question: What has caused our economy to lose over 8 million jobs in the biggest economic downturn since the Great Depression? If you answered “the unprecedented economic crisis caused by our financial industry’s long campaign to escape government regulation,” well, you’d be wrong.
Wrong at least according to the majority members of numerous House Committees which have convened hearings in recent weeks solely focused on the supposed evils of regulation. In hearing after hearing, members of the majority have resorted to misrepresentation and misinformation in singling out public enemy number one when it comes to job creation: government regulation.
These hearings demonstrate a central Republican article of faith; any regulation, however sensible and necessary it may be to protect the public, will prevent businesses from hiring. The fallacy of this false choice between regulation and jobs is exposed by a recent study released by the Economic Policy Institute (EPI). The study, entitled “A Lifesaver, Not a Job Killer,” counters the accusation that the Environmental Protection Agency’s (EPA) proposed national emissions standards for mercury, arsenic, and other toxic air pollution, known as the “toxics rule,” would present a threat to job growth.
The study makes an important point that critics of regulation conveniently overlook, namely regulation can spur creation of businesses and industries that do not currently exist. It contends that EPA’s rule to protect the public from toxic pollutants would attract investment and jobs to the environmental protection sector, resulting in a modest overall net increase in jobs. That’s quite a silver lining to a rule that would already lengthen lives, provide better health, and increase productivity by improving the quality of the air we breathe.
Not surprisingly, the benefits of regulation are given short shrift in House Committee hearings. Instead, these hearings demonstrate Republicans’ single-minded emphasis on the costs of regulation. Indeed, a House Committee hearing on regulation cannot be complete without at least one reference to a thoroughly discredited study which claims that the annual economic cost of all regulations total 1.75 trillion dollars. Even Cass Sunstein, the main witness of a recent House Energy and Commerce Committee hearing and Obama’s top regulatory official, called the study “deeply flawed ” when asked to comment on it.
In fact, the Office of Management and Budget estimates that the annual benefits of regulations dwarf the annual costs by up to seven times. The benefits in the workplace safety realm are impossible to ignore. An average of 14,000 workers died annually in 1970 prior to the creation of the Occupational Safety and Health Administration which implements workplace safeguards. In 2009, that number had fallen to 4,340 workers, even though the size of the workforce has doubled in that time.
Regarding environmental protections, the Clean Air Act, enacted in 1990, allowed the EPA to develop regulations that to date have prevented 1.7 million cases of asthma in children, 130,000 cases of heart disease and 54,000 cases of bronchitis according to a recent EPA study. These regulations cost $53 billion but resulted in benefits of $1.3 trillion, 25 times higher than the costs. Any sensible investor would tell you that’s a good investment.
Tomorrow, June 23rd, the Senate Homeland Security and Government Affairs Committee will be holding a hearing where proposals to fix a “broken” regulatory process will be unveiled. Senators will claim that their “regulatory reform” proposals will lead to job growth, most likely without giving details how. Don’t be fooled. These proposals will not lead to job creation, but they will slow or entirely shut down a system of public protections that is crucial to our country. Take action and urge your Senator to oppose any “regulatory reform” proposals introduced at tomorrow’s hearing.