What if it’s just not true about government regulations killing jobs?
Republicans are roundly convinced that Barack Obama and the Democrats have blundered the job of creating jobs and reviving the national economy.
When talking about their own plans for sparking a renaissance — including here in the North Country — the GOP heralds two big ideas, tax cuts and deregulation.
But a new report by the nonpartisan online journalism project Pro Publica is raising new questions about whether that strategy will be effective.
According to the in-depth article, regulation can indeed kill jobs or push industries to make big changes in the number of jobs they offer. But generally, those changes are off-set by the growth of other industries or jobs.
The article cites “data from the Bureau of Labor Statistics, which shows employers attributing a small fraction of job losses to governmental regulations. In the first half of 2011, employers listed regulations as the cause of 0.2 to 0.3 percent of jobs lost as part of mass layoffs.”
The report doesn’t speak to one of the Republican Party’s chief assertions, namely that many of these rules are unnecessary or frivolous.
But it does raise questions about whether deregulation can spark the kind of new prosperity that many conservatives promise.
What if other, more complicated factors, cause most job losses? Cheaper labor overseas, for example, or more efficient production techniques, or declining demand or competition?
Check out the article and chime in.
Do you think fewer rules will mean more jobs? Are all those rules really unneeded bureaucracy in the first place?
“Cheaper labor overseas, for example, or more efficient production techniques, or declining demand or competition?”
Some of these things are related to regulations. One of the key reasons that labor is cheaper in many places is that workers are not subject to the kind of labor laws that we have here in the US. Many of these are good rules but they do cost a considerable amount of money. Our labor rates are much higher in part due to regulation. I am not saying that the regulations are not good I am just saying that it is correct that regulations maker it more expensive to do business in many cases.
Government regulations do not kill jobs or make things more costly or any less efficient. That’s just silly.
Of course, it’s the Republicans carrying this banner. No Democrat would ever consider something like that.
The government just needs to be careful about how it makes the rules. Look at the requirement that gasoline in the US have 10 (and maybe now 20) percent ethanol. This regulation has (in some part) driven corn prices through the roof. It is a good time to be a corn farmer but a bad time to be a hungry poor person (worse than usual I mean). The entire world is having a difficult time trying to adjust to this regulation.
“Government regulations do not kill jobs or make things more costly or any less efficient.” You don’t really believe this do you? Some regulations clearly make it more costly to do business. Just look at a Chinese coal mine versus a US coal mine. I wouldn’t want to work in either but it is definitely cheaper to get coal out of the ground in China than in the US. Not saying the rules are not good but to think that they don’t cost money, I don’t get where you are coming from?
Of course regulations cost money.
Everything costs money.
It costs more to be poor in this country than it costs to be poor in China.
Amazing!
So if I understand the Republicans and Big Business correctly, the plan is to make American workers poorer than Chinese workers so that Big Business will move manufacturing back to the USA where labor is cheaper than in China?
Got to love it when a plan comes together. I can hardly wait.
A more local example I read about. The DEC is getting lots of trail work done in Wilderness areas since the temporarily lifted the ban on chainsaws in those areas. It seems indisputable that this regulation makes it harder and more costly to do work in those areas.
Todays NYTimes has an article claiming the the Southern and Western low-regulation low tax states have been hit harder in terms of joblessness than higher-taxed, more regulated states. That doesn’t mean that taxes and regulations caused the job losses – it might mean more of a boom/bust situation (and this is the bust). But it does mean that fewer regulations are not a panacea for anything.
Thanks for the Pro Publica link; interesting. I’m interested, though, for the specifics: what regulations are being targeted? I’m thinking: clean air? clean water? safe foods and medicines? discriminatory hiring affecting race, age, gender? rules for investment and banking industry? airline safety?
We can’t assess costs until we know which regulations disappear and the resulting damages are calculated.
“So if I understand the Republicans and Big Business correctly, the plan is to make American workers poorer than Chinese workers so that Big Business will move manufacturing back to the USA where labor is cheaper than in China?”
Pete, how did you come up with this one? There is a line right. If we all sit in a bubble and do nothing we will be pretty safe but we will be in a bubble just sitting there.
What people are talking about is a balance, a reasonable amount of rules. For example some employers are clearly going to have to channel more money to health care expenses when some of the new mandates kick in. When you have to spend more money on one thing than you obviously have to spend less on something else. Sometimes that is employees. We are all trying to do more with less these days.
I’ve always felt that conservative deregulation theory wasn’t just about open markets and creating jobs… it was also about maintaining the dominance of established industries that conservatives are aligned with.
When viewed through that prism, this study doesn’t come as a surprise.
Deregulation to create jobs in the oil industry… great. Regulations that have public safety value and would create jobs in alternative industries… not so great.
An excellent comment at the pro publica site:
“Regulations are like drops of rain in a hurricane with no one individual being responsible for the flood.”
To clarify my comment above. The ethanol regulations are just one reason that corn prices are high. China needs US corn. When we dedicate 40% of our crop to fuel production we drive the price through the roof. And again like I said we need to think this over carefully. The environmental costs of making fuel from corn (or other biomass) may be higher than the costs of not doing it. In many cases we are using more fossil fuel to make these non-fossil fuels. That is great when there are some of the government subsidies that we have now but wait till they go away. It is not sustainable if it costs more to make the fuel than you could ever hope to sell it for, and if you drive the other industry out on a rail you won’t have them there later when you go out of business yourself. The latest Scientific American has a good article on bio fuels. It is written by scientists (probably mostly liberal democrats!) not crazy right wing types. It is pretty scary. In a rush to make the world a better place we better be very careful.
Dave, these alternative industries are still in the infant phase.
More Pro Publica! Less Politico!
So what? Some people never let facts interfere with their ideology.
I echo what oa says. This is far more insightful than the boring, inane “analyses” of useless horse race polls.
The article cites “data from the Bureau of Labor Statistics”
Well, that in itself points to parking your brain, and “believe what we publish, not what you see”.
Just one example – allow drilling for oil off shore Virginia. That one sentence would create more jobs than Obama has in 2011.
Regulations are a necessary evil. Whenever you increase the cost of doing business you reduce business and reduced employment in that business, however sometimes that is okay and needed.
The cost to business must be balanced against the benefits to society at large of some regulations. Pollution regulations cost jobs there is no doubt about it, if you said hey you can pollute as much as you want and we have no regulations on building any sort of energy plant, none just go for it. Well many more would be built and we would live in a much more polluted country and there would be more employment in those businesses.
I think what you want to look at is at the margin which regulations can you let go of and balance the benefits of increased employment in those fields against the costs of the reduced regulations. It all depends on your point of view and where you sit. If you are an unemployed oil worker or coal miner or equipment operator or truck driver you may say hey let it rip! If you have a job or a trust fund and want a nice place to live and raise your kids you probably would say wait a minute here we need to think about what kind of country we are living in.
Its a balance. I don’t know the answers but it is worth looking at. The biggest thing that would increase employment is to totally disconnect health benefits, unemployment benefits and Social Security benefits from employment. Benefit costs are the big job killers right now and they start with reducing health insurance costs. Something that has just been dropped from the political discussion.
Regulations are not always a lose-lose result. As an example, regulations that require air emission standards for an industry might reduce their profits or jobs. But clean air means a healthier population and that means reduced health costs for society. Also, the technology to achieve emission standards usually require additional equipment, installation and monitoring, meaning regulations can lead to additional manufacturing and employment. It would be wise to consider all the benefits of a regulation before saying it is bad because it is inconvenient or “too costly” to an industry.
What if it never was “regulation killing jobs” but that was merely the excuse owners of corporations wanted to use to reduce the size of their workforce in order to increase the stock price? What if corporations were trying to rid themselves of the burden of pension plans and health insurance costs by shedding good jobs in the US and moving them to low-wage, low worker protection countries?
An update on the Occupy Wall Street protests (since you get a Market update every half hour to hour on NPR but rarely get any news on labor that is actually generated by concerns of the labor movement.
“Just last month, Rolling Stone reported on malfeasance and corruption at the Securities and Exchange Commission (SEC).
The SEC allegedly destroyed the files of some 18,000 investigations, thus whitewashing the records of countless financial firms and Wall Street players – some of whom played a key role in the financial collapse of 2008.” http://moneymorning.com/2011/09/27/occupy-wall-street-protests-wear-on-for-10th-day/
19 year old woman arrested in protest for graffiti — she was drawing with chalk on the sidewalk.
http://cityroom.blogs.nytimes.com/2011/09/19/wall-street-protests-continue-with-at-least-5-arrested/
Myown, it’s a rare regulation that is actually lose-lose: after all, they were ALL crafted by legislators who intended to do something useful.
Incidentally, there are other shibboleths that could use re-examination– take the idea that contracting out government work to private industry saves cost:
http://www.truth-out.org/guess-what-it-cheaper-use-federal-government-employees-contractor-employees/1315928973
Some time ago there were posts by Brian Mann here about liberal violence. Maybe we only get to hear about liberal issues/protests when there is violence involved. When there is a peaceful protest (now in the 11th day) the news coverage is scant.
This from the NPR Ombudsman:
“We asked the newsroom to explain their editorial decision. Executive editor for news Dick Meyer came back: “The recent protests on Wall Street did not involve large numbers of people, prominent people, a great disruption or an especially clear objective.”
http://www.npr.org/blogs/ombudsman/2011/09/26/140815394/newsworthy-determining-the-importance-of-protests-on-wall-street#more
So the lesson here is that the protesters either need to get Michele Bachman (NPR has covered rallies with FEWER than 100 people), or Sarah Palin to join them or they need to start setting cars on fire in order to get their voice heard on NPR.
NPR has become Radio Free Wall Street and Voice of the Tea Party.
“19 year old woman arrested in protest for graffiti — she was drawing with chalk on the sidewalk. ”
What a silly regulation!
“they were ALL crafted by legislators who intended to do something useful.”
Yes, the government always means well. Politics never has anything to do with it?
Walker, you don’t really have absolute trust in the government do you? I think that is a bad idea. I have seen many of your comments I am sure that you don’t think that all republicans (who often make regulations) are pure?
“NPR has become Radio Free Wall Street and Voice of the Tea Party.”
Knuck than why do you spend so much time here?
Knuck, those protests are a local news story and they have been covered by the local media (including the NYT which has a pretty far reach!). I don’t expect every protest here in my town to get on NPR. You are just trying to make a mountain out of a molehill, which is what protesters are often hoping to do with the media. In this case NPR chose not to bite.
On health care. If you truly want a level playing field, one where mom and pop business can compete with GM, GE and government, make private health insurance illegal and institute national health care that would provide the exact same benefits to the President and everyone. Period.
This would also mean the elimination of Medicare, Medicaid and every other health care program. One for all and all for one, fully funded through the income tax.
Well, Paul, you got me there! It seems to me that MOST regulations are well-intentioned, at least before the lobbyists get their hands on them.
As a general rule, though, it seems to me that the regulations most under attack these days are ones that would do We The People good, but that business considers to be bad for the sacred Bottom Line. Kinda like those pesky environmental regulations that should have stopped Love Canal.
Here’s an article proposing that ALL costs/benefits be considered when considering regulations or deregulation:
http://www.ourfuture.org/blog-entry/2011093926/ok-sen-shelby-lets-tell-world-about-jobs-and-regulations
And here is a deregulation bill, just passed by the Republican House, that clearly pushes air pollution costs/effects onto downwind individuals and society in terms of compromised health and ultimately larger health care costs for those individuals and society.
http://thinkprogress.org/romm/2011/09/23/327806/house-passes-sweeping-anti-clean-air-train-act/
Walker,
Yes some regulations are very well intentioned I don’t dispute that. But some are specifically designed to give one industry or another an advantage. And yes there are lobbyists working on all sides of an issue. From your comment I assume that you support the strong environmental lobbying efforts that we have here in the US.
And again when it comes to regulations and ‘the bottom line’ I think that you probably might support regulations that favor one business over another. For example a regulation that makes is easier for a solar panel maker to do business makes it harder for a competing industry (say a coal burning power plant, or a wind farm, or geothermal business) to do their business.
The saying about where the road that is paved with good intentions leads can be true.
And here’s another study by the World Bank claiming American businesses are the fifth LIGHTEST regulated out of the 183 countries included in the study as reported by MarketWatch.com:
“World Bank says U.S. business faces light regulatory burden
Businesses in the U.S. face the fifth-lightest regulatory burden among those in 183 nations, according to the World Bank. Hong Kong, New Zealand, Singapore, and the U.K. tied for having the lightest regulations. China placed 79th, Brazil 127th, and India 134th.
MarketWatch.com”
Bret stop posing as Paul.
To answer your question, you may not have noticed this but you are on the NCPR website. NPR is slightly different.
As to the “local story” bit, last I heard they were still calling it “ALL THINGS CONSIDERED” and they covered stories about a handful of nuts protesting military funerals in Kansas or some idiot threatening to bur a Koran. 80 people being arrested on Wall Street because their grievances are not being addressed by the government and using Wall Street to make the connection between the monied elite and the halls of power in Washington is a story. In fact it sounds much like the original Tea Party — you know the REAL one, a grass roots movement, not the phony AstroTurf movement funded by the Koch brothers and their ilk.
“Bret stop posing as Paul.” What?
Knuck, I thought this blog was about regulation and the effects on jobs??
“China placed 79th” Interesting? Of course “you are required to give X percentage of your monthly profit to the local communist boss even if half your workers died making it” is a regulation!
A couple of facts do shed some light on the economic problems we are facing:
1) The US has the third highest (manufacturing) productivity of any country per hour, second only to Taiwan and Korea (BOL statistics).
2) We have the lowest tax revenue as a percent of GDP since the 1950s
3) Our defense budget is 48% of the combined world defense budget
4) The poverty rate in this country is the highest it’s been in the 52 years the Census Bureau has been measuring it.
5) Corporations are sitting on the largest cash reserves (adjusted for inflation) ever, but not investing it.
This leads me to believe that our economy is stalled not for lack of supply, but for lack of demand because we don’t have money to spend on much else but the “volatile food and energy” sector.
If we HAD regulated banks and credit default swaps, we might not be in the pickle we are now.
OK, that said, regulation can be onerous. We do not seem to be able to craft regulations that aren’t prescriptive, in other words we have to tell people exactly what to do and how to do it, not just regulate the outcome. I sincerely want the benefits of most regulations–environmental, occupational health and safety, public health, etc.–but I would love to have those regulations be done in a less onerous way. I certainly don’t want them abolished!
KHL – even Matt Taibbi at RS admits he has overlooked the Wall Street protest story. But he promises to check it out.
http://www.rollingstone.com/politics/blogs/taibblog/occupy-wall-street-drawing-the-battle-lines-20110927
Heck a few years back we were making regulations that were pushing people to buy homes they could not afford and run up bills they could not pay. I guess maybe we have a much more responsible government making the decisions now but I tend to doubt it.
The same politicians that set regulations that helped get us into this mess then turned around and set up new regulations to supposedly prevent the same mess again. Please.
Admit it, they don’t know what they are doing. Democrat or Republican it doesn’t matter. That is why we tried here in the US to set up a system that had limited government. It is not perfect but it can and does work.
What regulation forced people to buy a home they couldn’t afford? Nobody forced people to buy any property nor did any regulation force a bank to give them a loan they couldn’t afford. People chose to do so as did banks because they saw the short term profits involved. And then there we all the other parties making short term profits. Real estate agents, appraisers, insurance companies, etc.
Paul: “For example a regulation that makes is easier for a solar panel maker to do business makes it harder for a competing industry (say a coal burning power plant, or a wind farm, or geothermal business) to do their business.”
And that’s a bad thing? Look, one of the problems of unregulated capitalism is a tendency to work a particular line to death… think the U.S. auto industry in the seventies. So sometimes (I think) it is necessary to craft some regulations to encourage industry to move in the right direction.
(Incidentally, the heavy hand of government in WW II provided just such a push; so did the moon shot. Of course, WW II wasn’t great for the auto industry in the short run, but it was great for it in the long run.)
Anyway, I curious, where do you think we’d be today if the anti-regulation folks had been in firm control for the last hundred years? No FDA, no EPA, no anti-trust laws, no banking regulation, no labor laws, etc. Would we be better off?
Walker, I was not saying that it was positive or negative it is simply a reality. It means that the government has more power to steer the ship. Even if that means into an iceberg. In my example what if wind power is a better alternative than solar or maybe there is some other struggling technology out there that can make a difference, the regulation favoring solar was a BAD regulation in my opinion. When you give one player an advantage you disadvantage the rest of the field so you have to be careful.
“Anyway, I curious, where do you think we’d be today if the anti-regulation folks had been in firm control for the last hundred years? No FDA, no EPA, no anti-trust laws, no banking regulation, no labor laws, etc. Would we be better off?”
Again, I think that you are over reacting to my comments. I don’t think I have said anywhere that we need no regulation.
Many regulations are crafted by industries to hurt their competitors. There is a whole sub field in Econ that studies the use of regulations by those in power to hurt those out of power.
On a micro scale think about regulations against street vendors in our villages. The point of these regulations is to protect current businesses not to help the public. Maybe this is okay, but we need to look at some of these regulations and why they exist. In health care there is are a range of regulations cloaked in public safety that were designed to protect the current providers of health care services.
Regulations are not written by congressmen and women they are written by lobbyists who have the technical expertise.
Alert to readers: this is not about regulations!
Rather, this is part of my on-going coverage of NPR hypocrisy around the Occupy Wall Street protest.
Finally NPR has found time to cover the story since it doesn’t seem to be going away, in fact it seems to be getting bigger and spreading to cities nation-wide.
http://www.npr.org/2011/09/27/140854961/wall-street-protest-continues-this-week
Interesting that they also found time to also cover a UC Berkeley Republican diversity protest in the guise of a bake sale. No number of protesters stated, no prominent persons mentioned, no great disruption.
http://www.npr.org/templates/story/story.php?storyId=140857501
I will now relinquish control of this blog and return you to your
discussion of regulations.
Paul – you do seem reasonable (can’t be Bret, you don’t play the victim). Please give a few concrete examples of regulations that are costing big business and preventing job growth. I’ve yet to hear a single conservative candidate for President give any concrete examples. I think the reason for that is they want their base (TEA party) to hear “environmental regulations need to be removed”.
It’s my understanding that any regulation resulting in a cost/benefit of $100 million needs to be reviewed by some congressional comm. I also understand that President Obama has asked all federal agencies to halt pending regulations and to systematically review all current regulations that “stifle job creation”. A recent poll has shown that regulations are not the primary concern of businesses right now. Businesses are concerned about lack of demand, something that conservatives seem to want to make even lower.
One other thing. G.W. Bush actually put into effect more regulations in his first few years in office than has President Obama. It appears regulations are only bad when a Democrat is President. Just look at JDM’s comments. You can’t trust stats from government agencies when Democrats are in power. It’s as if some people believe that employees of federal agencies actually change party depending on which party is in power.
It is interesting that conservatives calling for getting rid of regulations only do so where it is regulation of business, where it impinges on profits. They would like to see more regulation of individuals, a total ban on same sex marriage, a total ban of abortion, limitations on free speech and the right to vote, etc., etc.
Business regulation should make sense and there should be a demonstrable ‘societal benefit’ to regulations. The Pro-Publica article correctly points out that we need to do more study to determine what regulations actually produce such benefits.
Whether or not regulations kill jobs is irrelevant to the conservatives – it sounds good and they just don’t like regulations on business or the environment. Remember these guys aren’t into “truth” in the same way that academics are.
Here is another study that shows regulations and taxes or uncertainty about regulations and taxes is not holding back the economy.
http://www.epi.org/publication/regulatory-uncertainty-phony-explanation/
And Krugman must have read this blog:
http://www.nytimes.com/2011/09/30/opinion/krugman-phony-fear-factor.html
more Krugman, on calculating what external costs, like from pollution, would be without regulations:
http://krugman.blogs.nytimes.com/2011/09/30/markets-can-be-very-very-wrong/