Is the GOP De-Regulating Lies?

One thing all the current GOP presidential candidates seem to agree on is that the Obama administration is nuts for the whole regulation thing and that the Uber Nanny Obama is on the verge of regulating our country into economic oblivion.

The Republicans have focused their special ire on the EPA. That’s, of course, the awful liberal pinko agency that was first proposed by President Richard Nixon. The current crop of Republicans especially hates the Clean Air Act, signed into law by Nixon. The current crop also hates the Clean Air amendment of 1990. That’s the one to curb acid rain. It passed by a vote of 89-11 in the Senate and was signed into law by President George H. W. Bush. Of course that was all back when Republicans tended to be members of the reality-based community.

Now, Rep. Michele Bachmann and Newt Gingrich say they hate what they call a Democratic “tsunami” of regulations, and they want to padlock the doors of the E.P.A. Herman Cain says the EPA has gone wild and is out of control. Rick Perry called on Barack Obama to halt all regulations because “his E.P.A. regulations are killing jobs all across America.” And Mitt Romney has complained that: “With scant regard for the costs imposed on consumers and businesses, President Obama has vastly expanded the regulatory reach of government.”

This is all going over really well with the Tea Party crowd, of course. The catch? It’s just not true. According to a recent study by Bloomberg News (a business news service, mind you):

Obama’s White House has approved fewer regulations than his predecessor George W. Bush at this same point in their tenures, and the estimated costs of those rules haven’t reached the annual peak set in fiscal 1992 under Bush’s father.

Bloomberg found that Obama’s White House has approved 4.7 percent fewer regulations than were cleared by President George W. Bush’s administration in the same time-frame.

Bloomberg also quotes Roger Noll, co-director of the Program on Regulatory Policy at the Stanford Institute for Economic Policy Research as saying: “The economy as a whole doesn’t employ fewer people as a result of regulation … It’s just that they are allocated in a different way.”

Despite what appears to be the Republican’s collective clinical depression about the “anti-business” climate here in the U.S., a recent report by the World Bank rates the United States as one of the best countries on the planet in which to do business. Out of 183 countries, we rank No. 4.

Besides history and facts, one of the other things that Republicans don’t like to acknowledge is how a lack of regulation allows what economists call “un-captured costs” to be shifted to others. They sometimes call such costs “pecuniary externalities” — a great phrase to bring up at your next cocktail or tailgate party, so here’s how it’s defined by economists:

Pecuniary externalities: a cost or benefit imposed by one party to another party that operates through the changing of prices, rather than real resource effects.

Let’s take a real world example of what this means: Without regulation, a power-plant in Ohio can save all the money it would cost to clean up their smokestack emissions, choosing instead to pump out vast quantities soot and nitrous oxide. That toxic stew then moves in a plume eastward toward New England. In a de-regulated environment, someone other than the people who produce that plume end up paying for the cost of the plume in lots of different ways.

Without common-sense regulation, the people who create the toxic plume and who profit from the economic activities associated with it get a free ride. Instead, it will be the people downstream, who live in the plume, who have nothing to do with producing it, and who don’t profit from the power plant or buy its artificially cheap electricity, that will pay the price. It’s the coughing, red-eyed, phlegmy people who live in the plume who absorb the costs.

They pay through higher rates of childhood asthma and the associated medical costs, through increased rates of cardiac disease, lost work days, acid rain, and the decreasing value of acidified lake and de-forested mountain property.

Essentially, regulation is how we sort out conflicts over who should bear the un-captured costs of economic activity, such as power plants or cement factories, without resorting to knife fights. I love me a good story about Jim Bowie and knife fights and settling the West as much as the next guy, but I really do think that regulation is a better way go.

The Republican efforts to gut regulations that prevent air pollution and workplace accidents, that prevent groundwater contamination and deaths from food poisoning, do not represent some kind of “free lunch.” Wholesale removal of just clean air regulation will mean that somebody — maybe you — will have to pay for it in lost years, lost health, or lost income.

A recent study by the EPA found that in 2010 alone, the regulations of the Clean Air Act had prevented:

  • 160,000 premature adult deaths from particle pollution
  • 230 infant deaths from particle pollution
  • 86,000 emergency room visits
  • 54,000 cases of chronic bronchitis
  • 130,000 incidents of acute myocardial infarctions
  • 86,000 emergency room visits
  • 13,000,000 lost work days

To my knowledge, no one has ever run on a platform that is pro-unnecessary regulation. We can all agree that we should do away with regulations whenever they’ve become unnecessary. If there is a regulation someplace that says everyone should button his or her shirt from the bottom up instead of the top down, let’s axe it now.

But for every regulation that the Republicans want to see abolished, they should have the honesty and the decency to acknowledge all the real-life costs they wish to shift on to the shoulders of others. How many premature deaths, how many worker injuries, or how many deaths from food poisoning do the Republicans think we should be willing to accept in exchange for removing a regulation? 100? 1,000? 160,000?

The Republican candidates like to talk about how they are willing to make the “hard decisions.” But they don’t like to talk about whom the decisions are going to be hard on. I’m going to make an educated guess here: It won’t be hard on the Koch brothers.

  • Johnj

    Without verifying your facts, it certainly seems like you have a point.

    Nonetheless, the amount of regulations that even a small business has to follow adds tremendously to its overhead. The worse part is that many small businesses get snared because they don’t have the where with all to stay on top of the federal, state and local regulations.

    Therefore, without disagreeing with your singular argument I, as a registered Republican, generally have a problem with the excess amount of regulation in this country.

    I would therefore propose a budget cap on regulations – for every page of regulation enacted – a page of unnecessary or excess regulation be over-turned. Then legislators (many of whom have no real idea of how much it costs to implement the various regulations and would fail miserably even on basic employment regulations – i.e. overtime) would be forced to consider the consequences of regulation and the ultimate benefit.

    Of course, this is a simplistic and impossible approach, but I don’t know any way to reduce the strain on business and people in this country of too many regulations.

    So, in general, I agree with the general Republican espoused philosophy of less regulation, which I think in general terms is what most individual (not candidate) Republicans are talking about.

  • Barry

    Dear John J.

    I agree with you that the least possible amount of regulation is the desirable amount. And that there are going to constantly be attempts to pass well meaning regs that have such burdensome consequences – they need to be repealed. A good example of that is the reg in health care reform that concerned 1099′s forms – that has been since been repealed.

    But the meme that the Republican candidates are pushing now seems to be that regulations only impose costs – they don’t provide benefits. And the Clean Air Act is a clear example that this is not true.

    The paper that the Pecuniary Externalities hyperlink will take you to is titled: Market Failure and the Structure of Externalities. Pure free market forces simply can not address issues of pollution that drifts across state lines.

    It is a good idea to have robust debates about any and all regulations before and after their implementation – but part of the discussion should always be about the cost to lives and well being of all those that will be impacted – not just the cost to small business. And the issue of job creation follows deregulation is simply not supported by research.

    Thank you for your thoughtful response.
    Regards,
    Barry Nolan