Regulations are a really big drag on US growth

[EnjoyIt]

The insults towards Yaeger are real button has a point there I guess.  Many on this forum are very liberal and any discussion against those liberal ideals gets a response full of insults.  I have had muck slung in my direction as well for my more fiscally conservative views.

Another item that Button is accurate about is there are a few here who try and justify regulations as a good think no matter what they are which is just as naive to say no regulations are beneficial.

Year states that regulations as a totality have a cost that inevitably results in decreased wages and decreased growth.  in totality this is an accurate statement.  Yes, some regulations have created the benefit of clean water and similar.  But at the end of the day, all the regulations together is what also causes lower wages and decreased growth.  I believe that statement is true.

I do not think a single one of you can say that more regulations do not cost more money to enforce and execute.  And I doubt a single one of you can not agree that someone has to pay for those regulations.  Yes at times those costs are offset by increased profit somewhere else.  But in general those cost come from somewhere.

[obstinate]

regulations as a totality have a cost that inevitably results in decreased wages and decreased growth

This is the bone of contention. "Inevitably" means "in all cases." It is not true that all regulations cause decreased wages or growth.

To name a few examples, anti-trust regulations are widely considered by economists to be necessary to achieve maximum growth. This is because, otherwise, monopolists will not have incentive to innovate and improve, since they can use their monopoly to crush competition. Without these, we'd basically live in a stagnant dystopia. That alone accounts for a significant net benefit to innovation, growth, and wages. Another example are regulations aimed at curbing global warming. There will be infinitely negative growth if we heat the planet to the point where we can't live on it, which we seem hell-bent on doing at the current moment.

These are two examples that 100% disprove your and Yaeger's claim that regulations inevitably cause slower growth or decreased wages. I have noticed you and Yaegar making sweeping, unjustified generalizations in this thread. That is what people are reacting against. Just to be super clear. That is why you're facing the resistance that you are. The unfounded, sweeping generalizations you are making. Neither of you seem to have any idea what you're talking about, beyond regurgitating conservative talking points about the evils of gubmint. If you gave off the impression of being interested in conversation in good faith, then you might not be having so much trouble.

I do not think a single one of you can say that more regulations do not cost more money to enforce and execute.

Since nobody in the thread has made that claim, I don't really know what you're getting at.

If you want to talk about specific regulations and whether they're efficient or not, or whether the net costs are worth it if indeed they aren't, that's fine. There's interesting discussion to be had there. But "regulations r bad" is stupid. If you feel like that's me calling you names, then maybe your skin just isn't thick enough for real policy discussion.

[Yaeger]

Nah, it was my fault. By attacking the credibility of regulations, I think I was naively attacking the cornerstone of their political ideology: that government intervention in the private market provides a net benefit and cannot increase poverty and lower standards of living. I think these people genuinely believe that the vast majority of regulations provide a net benefit to society, which they can't substantiate, regardless of whatever our stance is. They won't even admit the possibility of intervention causing negative outcomes in the market, even unintentionally. They've forgotten the Iron Law of Regulation: ‘There is no form of market failure, however egregious, that is not eventually made worse by the political interventions intended to fix it'.

Aside from the implications of the study in my first post, I'd like someone to explain why economic growth is not important in the fight against poverty and why the regulatory burden doesn't seem to be a concern. Even the OECD (Organization for Economic Cooperation and Development) notes:

A competitive product market environment that allows new firms to challenge incumbents, efficient firms to grow, and inefficient ones to exit, can help boost economic growth and living standards. Two main policy ingredients are necessary for a growth-enhancing competition environment. First, product market regulation should be set in a way that does not hamper competition and, second, an effective antitrust framework needs to be in place that safeguards a level playing field among firms.

Meaning, that a punitive set of regulatory rules can often be counterproductive if it operates counter to fostering a growth-enhancing competitive environment. Getting the balance right is essential in ensuring that the costs of regulations don't outweigh the benefits. This study suggests that the costs, in aggregate, are cumulative in nature and impact the economy more than the sum total. More so than was previously thought. If true, I think we need to reassess the our regulatory policies and enact reforms (which should be done anyways) to reduce the larger detrimental impact to economic growth and living standards.

Linking economic growth and the ability to reduce poverty:
http://www.oecd.org/eco/growth/going-for-growth-2016-editorial-restoring-healthy-growth-policies-for-higher-and-more-inclusive-productivity.htm

[EnjoyIt]

regulations as a totality have a cost that inevitably results in decreased wages and decreased growth

This is the bone of contention. "Inevitably" means "in all cases." It is not true that all regulations cause decreased wages or growth.

I never said all regulations inevitably lead to decreased wages.  I did say that the aggregate of all them does. 

The more regulations you have, the higher the cost to be in compliance.  To maintain profits that cost leads to lower wages and decreased growth.  It seams so simple.

[matchewed]

More regulations means more people were alive/lived longer/had availability to purchase any particular good in the economy therefore regardless of the drag regulations have led to increased growth. It seems so simple. Or rather trying to boil it down to broad statements is too overly simplistic and fails to take into account nuance. It is just as black and white as this phantom other side you argue against.

[2buttons]

regulations as a totality have a cost that inevitably results in decreased wages and decreased growth

This is the bone of contention. "Inevitably" means "in all cases." It is not true that all regulations cause decreased wages or growth.

To name a few examples, anti-trust regulations are widely considered by economists to be necessary to achieve maximum growth. This is because, otherwise, monopolists will not have incentive to innovate and improve, since they can use their monopoly to crush competition. Without these, we'd basically live in a stagnant dystopia. That alone accounts for a significant net benefit to innovation, growth, and wages. Another example are regulations aimed at curbing global warming. There will be infinitely negative growth if we heat the planet to the point where we can't live on it, which we seem hell-bent on doing at the current moment.

These are two examples that 100% disprove your and Yaeger's claim that regulations inevitably cause slower growth or decreased wages. I have noticed you and Yaegar making sweeping, unjustified generalizations in this thread. That is what people are reacting against. Just to be super clear. That is why you're facing the resistance that you are. The unfounded, sweeping generalizations you are making. Neither of you seem to have any idea what you're talking about, beyond regurgitating conservative talking points about the evils of gubmint. If you gave off the impression of being interested in conversation in good faith, then you might not be having so much trouble.

1. You think they are talking about Sherman 1890 and Clayton 1914? Seriously?
2. Global warming regulation? No matter what your worldview is on that matter, that absolutely hurts the economy, although you didn't really specify a specific regulation, you just GENERALIZED global warming regulation. There are reams of regulation that the EPA has put out on global warming that hurt businesses left right and center.

[paddedhat]

2. Global warming regulation? No matter what your worldview is on that matter, that absolutely hurts the economy, although you didn't really specify a specific regulation, you just GENERALIZED global warming regulation. There are reams of regulation that the EPA has put out on global warming that hurt businesses left right and center.

Your're right, ALL that matters is the health of the US economy, here and now. Rising seas, hundreds of millions of the poorest among us living in countries that are rapidly becoming uninhabitable, setting new monthly global temperature records. Sigh, nothing but needless distractions.  As long as Goldman Sachs is still doing nicely.

[2buttons]

I absolutely think we should make sure the environment is in good shape, but I am not willing to overlook blatant fear mongering.  Uninhabitable?  Name one single country in the world that is uninhabitable due to global warming. Just one. 

[paddedhat]

I absolutely think we should make sure the environment is in good shape, but I am not willing to overlook blatant fear mongering.  Uninhabitable?  Name one single country in the world that is uninhabitable due to global warming. Just one.

You do understand the concept of the word "becoming" ?  As for the blatant fear mongering garbage, save your bullshit for the conspiracy sites.

Most coastal villages of Alaskan natives, those located above the arctic circle, have succumbed to the ocean in the last few decades, or are in the process of washing away. These are places they occupied for hundreds, to thousands of years. Southern Florida is beginning an epic battle to combat sea level rise, and is watching their fresh water supply dwindle as rising salt water levels intrude. All while their governor tries to deny reality, and defund any efforts to protect his state. Human caused climate change is settled science. It is the consensus of the vast majority of climate scientists, and it doesn't matter if your a knuckle dragger, like many of the idiots who were elected governors to southern states, or somebody who wastes bandwidth here with your garbage,  you will eventually lose to the facts. The whole conspiracy angle is fabricated from lies, yet clearly a brilliant marketing achievement on the part of stakeholders, and well documented. The movement is largely limited to those in north America who seem to lack the ability to actually think for themselves, and refuse to acknowledge the facts.

[2buttons]

1. nice language.

2. Name one of these towns that have already succumbed to the ocean, not Kivalina which is 400 people and as far as I know has not been moved yet.

Apparently, you and I disagree what the word rapidly means. Even the hot spots in the Middle East, are expected to have 1 heat wave every ten years where they shouldn't exercise outside. 1 heat wave every decade.

[Scandium]

At the end of the day most regulations have a cost that needs to be paid by someone.  Sometimes that cost is offset by growth somewhere else, but in general it leads to decrease wages and increased unemployment since the last thing to go is profit.  I have given a few examples of that as well.

Yeah, so? Nobody here has seriously contested this. Regulation can sometimes reduce growth (and sometimes not, or in the short term but lead to increased long term growth). Is this supposed to be some revelation nobody was aware of?

These things are all know. We have a democracy through which we as a people have said want these regulations, costs included. And there other we have decided we don't want. And there are others we are realizing are stupid and slowly getting away from (war on drugs). Democracy, it works (slowly, eventually).

So what exactly are you arguing by stating things most people here know and agree with (more or less)?? I'm really struggling to see what your point is.

[Fishindude]

All of the ridiculous regulations are definitely a huge financial strain on many businesses.  Most companies spend a ton of time and money unproductively, just to comply with regulations, dot the I's, cross the T's, etc. just so they don't get into trouble with big brother, the government.  All of that time and money spent on compliance issues is time and money that could be otherwise used taking care of business.

[Rollin]

Maybe if we stopped sleeping and just worked through the night and day we could move that "growth" factor up a bit. It seems all important.

Funny that on a FIRE forum we worry about economic growth when we are planning on leaving the workforce early (reduced "growth') and consuming less ("reduced "growth").

Which do we want?

[2buttons]

You need economic growth so your portfolio will increase in size.  The more economic growth the sooner you can FIRE.  Yaeger brings up this point, because he wants to unleash businesses so it will benefit all of our portfolios. 

You need regulation in our lives for sure, but some of it is just plain ridiculous. For instance, I have a motorized lawnmower (I know I know should have a push), but I have to use a gas can that the EPA has required has a certain nozzle to avoid spilling of gas. The can is so poorly designed, but its up to code, that I ended up buying a funnel, I don't use the stupid nozzle, and I spill way more gas now filling up my lawnmower than if they would have left the issue alone and let us use the old cans.  Great for the environment for sure. 

All the while, it makes the gas can more expensive to make and who ends up paying for that extra cost in the gas can? I do. Thanks EPA, you were able to pretend you fixed the problem that you didn't fix, and cost us all more money.

[Scandium]

You need economic growth so your portfolio will increase in size.  The more economic growth the sooner you can FIRE.  Yaeger brings up this point, because he wants to unleash businesses so it will benefit all of our portfolios. 

You need regulation in our lives for sure, but some of it is just plain ridiculous. For instance, I have a motorized lawnmower (I know I know should have a push), but I have to use a gas can that the EPA has required has a certain nozzle to avoid spilling of gas. The can is so poorly designed, but its up to code, that I ended up buying a funnel, I don't use the stupid nozzle, and I spill way more gas now filling up my lawnmower than if they would have left the issue alone and let us use the old cans.  Great for the environment for sure. 

All the while, it makes the gas can more expensive to make and who ends up paying for that extra cost in the gas can? I do. Thanks EPA, you were able to pretend you fixed the problem that you didn't fix, and cost us all more money.

Are you sure this isn't because of a flame arrester in the nozzle? Those are because people poured gas onto a fire, it flashed back and blew them up. The manufacturer got sued and installed devices to prevent this. Little, if any government regulation involved. Unless civil suits count as government meddling?

[2buttons]

http://www.dailykos.com/story/2014/11/6/1342736/-Has-anyone-purchased-a-new-gas-can-lately

[EnjoyIt]

At the end of the day most regulations have a cost that needs to be paid by someone.  Sometimes that cost is offset by growth somewhere else, but in general it leads to decrease wages and increased unemployment since the last thing to go is profit.  I have given a few examples of that as well.

Yeah, so? Nobody here has seriously contested this. Regulation can sometimes reduce growth (and sometimes not, or in the short term but lead to increased long term growth). Is this supposed to be some revelation nobody was aware of?

These things are all know. We have a democracy through which we as a people have said want these regulations, costs included. And there other we have decided we don't want. And there are others we are realizing are stupid and slowly getting away from (war on drugs). Democracy, it works (slowly, eventually).

So what exactly are you arguing by stating things most people here know and agree with (more or less)?? I'm really struggling to see what your point is.

I'm arguing 4points.

1) All these regulations are keeping wages down and growth down. Someone has to pay for compliance of those regulations.

2) Many liberals feel we need more laws and regulations which I think is wrong and will continue to pull down wages and adversely affect growth of our economy. Each addition regulation needs to be cautiously evaluated.

3) We need to go back and revisit many of the regulations we have and see how we can free our schools and businesses. Many of those regulations just need to go away.

4) We need to realize that just because the initial goal of a particular regulation may look good on paper, it will have significant consequences and very well may do little good such as the regulations in our schools and the war on drugs. Other industries are also affected by over regulation but most here have experience and knowledge in our puss poor education system and the failure of our drug laws.

[wienerdog]

The can is so poorly designed, but its up to code, that I ended up buying a funnel, I don't use the stupid nozzle, and I spill way more gas now filling up my lawnmower than if they would have left the issue alone and let us use the old cans.  Great for the environment for sure. 

Lol.  My old can's spout has been cracked for a couple years so last year I wanted to replace it since it was leaking what I thought was a good amount of gas.  Hit up wally world and of course you can't buy a new spout.  Then I see this new whiz bang can thinking wow this will be a big improvement.  Ends ups spilling more than the can with the cracked spout.  Maybe I'll switch to the funnel but those always piss me off as you can pour faster than the funnel drains. 

I never knew that spout was a part of regulation.  I was thinking what in the hell made someone put this POS on here plus the price of the new can was ridiculous.  Probably needed to recover all the testing fees to make sure the can is CARB compliant.
 

[Fishindude]

That gas can is a prime example.
Those things are so darned unhandy, I would suspect you are more apt to spill and splash gas -vs- the simple old gravity, vented kind.
Anybody that uses one much, replaces that spout with something simple.

[crazyworld]

Haven't read all the replies yet, apologies if repeating...in short, sure regulations add cost.  But not having any does too, eventually.  My personal experience - no/weak environmental regs in India - rampant pollution in the last decade.  Foul air, water, floods & mudslides due to deforestation, cancers due to excessive agricultural and other chemical use - list goes on.  They are trying to patch up now, but it is hard to do and expensive.  People have all kinds of respiratory complaints, and those who used to make fun of me for pointing out the air quality on my visits back are not doing so anymore.  There will be healthcare issues for the current generation for years to come.
OTOH, heavy regulation on banking & finance sectors - probably costs the economy growth and consumers more money, but banking there was not affected nearly as much by the 2006-08 banking meltdown here.
You have to pay for it somewhere. 

[wienerdog]

I never knew that spout was a part of regulation.  I was thinking what in the hell made someone put this POS on here plus the price of the new can was ridiculous.  Probably needed to recover all the testing fees to make sure the can is CARB compliant.

Just did a quick search as I was thinking maybe there is money to be made here.  There are replacement nozzles like the No-Bama nozzle and Ez-Pour.  Looks like the regulation did come from CARB (California Air Resource Board) back in 2008 as I noticed any new can says CARB compliant on Walmarts website.  The Feds decided to adopt CARBs rule later to make it nation wide.  If live in a non-CARB compliant state you're still stuck with the new can but the fed's only regulated the can. 

You can buy a new nozzle at these fine stores in non-CARB states.  http://ezpourspout.com/retail-stores/retail-vendors/
Just be sure to follow the directions and only use this "special" nozzle on water cans as it was designed.  Amazing what a simple instruction set can change.

[Fishindude]

Yep, I've bought some of those EZ Pour spouts, prime example of regulation causing waste.
They force you to use a silly mechanical pour spout which jacks up the price of your gas can, then you find out is is a total pain to use, so you spend more money for just a simple spout.

[Scandium]

What does well-regulated mean? Well-regulated like the 1950's? Well-regulated like today? Well-regulated like the 1980's? What's the perfect balance between regulation and growth for you?

By the way I feel that chart is a bit misleading. Of course the federal register is longer now, it's regulating more than in the 1920s! How many pages of regulation was there for telcos and the internet in 1930? Or jet planes, microwaves, USB cables, or any of the myriads of things/jobs/processes invented since then? The economy is orders of magnitude larger so there is more to regulate. Of course it's longer. A more accurate graph would show pages per GDP, or something. Still not very useful as people here have pointed out, but maybe more relevant.

Even so I'm actually surprised there hasn't been more change since the 80s till now.

[2buttons]

Good point. Don't forget clear improvements in gas cans on your list.

[Hedge_87]

Good point. Don't forget clear improvements in gas cans on your list.

YES! I just don't know how we ever survived them old days. You can't catch yourself on fire if the gas cannot get out of the can right?

[Telecaster]

Nah, it was my fault. By attacking the credibility of regulations, I think I was naively attacking the cornerstone of their political ideology: that government intervention in the private market provides a net benefit and cannot increase poverty and lower standards of living.

Now you are just being silly. 

[A Definite Beta Guy]

I absolutely think we should make sure the environment is in good shape, but I am not willing to overlook blatant fear mongering.  Uninhabitable?  Name one single country in the world that is uninhabitable due to global warming. Just one.

Global warming is the #1 issue for Bangladesh in 100 years. Hehehehehehe.

I just checked into this thread but when people mention regulation, anti-trust regulation rarely makes the discussion. Most economists would agree that monopolies cause dead-weight loss as well, but whether government can correct it is a totally different story. Mancur Olson and public choice would argue otherwise.

On the other hand, a lot of conservatives pooh pooh environmental regulation quite unfairly. The US has cleaned up its environment significantly. We don't dump raw sewage into lakes and rivers quite like we used to, and we can breathe much cleaner air than we used to. That's something to be proud of...though I think 10-20 years of environmental impact studies are a bit overkill.

[obstinate]

1. You think they are talking about Sherman 1890 and Clayton 1914? Seriously?

Are you under the mistaken impression that these are not regulations?

[Scandium]

I'm arguing 4points.

1) All these regulations are keeping wages down and growth down. Someone has to pay for compliance of those regulations.

2) Many liberals feel we need more laws and regulations which I think is wrong and will continue to pull down wages and adversely affect growth of our economy. Each addition regulation needs to be cautiously evaluated.

3) We need to go back and revisit many of the regulations we have and see how we can free our schools and businesses. Many of those regulations just need to go away.

4) We need to realize that just because the initial goal of a particular regulation may look good on paper, it will have significant consequences and very well may do little good such as the regulations in our schools and the war on drugs. Other industries are also affected by over regulation but most here have experience and knowledge in our puss poor education system and the failure of our drug laws.

All of these things are well known to most people and totally common sense. Perhaps with a few exceptions I don't think anyone wants to regulate things for the sake of regulating. Yes all regulation has cost, yes this needs to be studied and evaluated, yes this is being done with more or less success. Sometimes there is dumb regulation, then we try to fix it. None of what you say is some special knowledge, it's part of political discussions all the time.

People also react negatively to the "less regulation!" crowd because this often (usually?) is codeword for businesses that want to dump costs onto society and cause public destruction (environmental or human) for short term profit. Miners that can't put cyanide leach piles near groundwater see this as a "undue cost inhibiting their growth", while society see it as fair. Not using child labor clearly keeps growth down. What is good or bad regulation depends on the perspective. Apart from pure rent-seeking, most regulation has legitimate reasoning behind it. (Though not always great reasons).

[GuitarStv]

I'm arguing 4points.

1) All these regulations are keeping wages down and growth down. Someone has to pay for compliance of those regulations.

2) Many liberals feel we need more laws and regulations which I think is wrong and will continue to pull down wages and adversely affect growth of our economy. Each addition regulation needs to be cautiously evaluated.

3) We need to go back and revisit many of the regulations we have and see how we can free our schools and businesses. Many of those regulations just need to go away.

4) We need to realize that just because the initial goal of a particular regulation may look good on paper, it will have significant consequences and very well may do little good such as the regulations in our schools and the war on drugs. Other industries are also affected by over regulation but most here have experience and knowledge in our puss poor education system and the failure of our drug laws.

1)  Regulation can impact growth both positively and negatively.  Creating common standards for example, can reduce the waste of having multiple competing methods of doing something.  Telephones wouldn't have caught on the way that they did if each city followed different rules regarding line voltage, signal frequencies, and the like.  That's an example of the benefit of regulation.  That said, there are certainly regulations which make it more expensive to be in business.  It's cheaper to dump chemical waste down the drain.  Having regulations to protect public water will absolutely add to the cost of business.

There's no guarantee that wages will go up because of reduced regulation.  I've seen no evidence that this is the case in anything brought up in this thread.  If this is your belief, what are you basing it on?  Why do you think that the people running a company would not just pocket the extra money?

2)  Aside from the reiteration of the two points addressed above, I agree . . . any regulation should be cautiously evaluated*.  Is this not the case already though?  What change are you proposing?

3)  You're saying that many regulations need to go away.  I think what you mean is that outdated or regulations that are no longer serving a useful purpose should be re-evaluated.

4)  Can you elaborate on exactly what educational regulations are damaging the school systems in the US?  I have no experience in this area.  I do agree that overzealous regulation coupled with excessive penalties regarding drugs are a serious problem in the US.




*A serious problem that exists with discussing regulation is associated with the evaluation process.  There are many instances where the problems associated with lax regulation is not understood until later, and not really felt by the public for many years.  We're dealing with serious chemical problems and spills caused by mines that were abandoned a hundred years ago.  In this type of case it's not possible to hold the original business or owner liable . . . they're often out of business or dead.  The enrichment of a few in the past caused by lax regulation becomes a drain on the economy of the future.

For problems that are slow acting (like climate change), we might know that there's an issue but not yet have the science to exactly quantify what the future ramifications of that problem are.  Is it better to have the economy booming now, at potential tremendous cost to the economy of the future?  These are not simple questions to answer.  Regulations need to balance between the future and present with insufficient information.  Veering entirely into regulation is detrimental, as is veering entirely away from it.

[desertadapted]

This thread has been largely research free.   Probably for good reason.  After all, shouting about government regulations on the internet is fun! I think that’s also because analyzing the actual economic and associated impacts of regulations is hard work.  Let’s talk environmental regulations for a second.  The non-libertarian wing of this thread keeps pointing out (to crickets, basically) that you can’t analyze a regulation’s utility without also measuring its benefits.  But the potential benefits aren’t just about cleaner air.  Let’s say you put a scrubber on a coal fired plant.  That costs money (sad consumers and utility pay for scrubber).  But it also creates a follow on economic impact (scrubber manufacturers rejoice!; coal power costs more leading to more natural gas sales, frakkers rejoice!).   So was that scrubber a drain?  Dunno, but it’s going to take a lot of work to parse out all the benefits/detriments.  So yeah it may be possible to make bland assertions about regulations being a drain on the economy (or a benefit to the economy), but I don’t think it’s possible to make any conclusions about a particular piece of regulation within really diving in.  This is really just another less artful way of saying what GuitarStv said in his *.

Notwithstanding all that, since it’s fun to cite random studies we find on the internet to support our point of view, here’s my contribution:  http://bechtel.colorado.edu/~silverst/cven5534/Economic%20Impact%20Environ.%20Regulation.pdf

Flame on!

[2buttons]

I skimmed it. While there is a clear bias in this study, the author does attempt to be balanced in the approach. However, when the comparative analysis resulted in a suggestion of a 2% cost, juxtaposed against "other things are more expensive" to companies and the constant scapegoating of lobbyists and big business the argument loses credibility quickly.  I see this all the time, and it bothers me when people use a false comparison to lazily get out of a true debate of the issue. 

2% is 2%. When companies are operating at razor thin margins and after the economic crisis they are working workers harder to compete 2% matters.  2% could mean jobs. 2% could mean they lose their competitiveness vis a vis foreign competitors that don't play by the same rules, could care less about the environment, and operate under a friendlier corporate tax structure.  2% matters.

I did appreciate the fact that the author also goes on to say, we shouldn't heap on more and more environmental regulation.  On the one hand it was a good suggestion, on the other hand it runs counter to his or her argument.  Cynically, I assume it was written in to inoculate the author against the suggestion they have a clear bias.

At the end of the day what matters is that we balance good regulation with remaining competitive in the global marketplace.  You cannot completely unleash business, but you also cannot regulate business out of the marketplace. 

[GuitarStv]

At the end of the day what matters is that we balance good regulation with remaining competitive in the global marketplace.

I disagree.  If regulation is good, marketplace competitiveness is irrelevant.

If you can become the world leader of making Kanye West bobble heads, but to do so you will need to cut down every tree in the US . . . good regulation would protect the trees, to hell with the bobble head economy.

[Yaeger]

Has anyone here actually read a CBA for a major environmental regulation, the assumptions, and the clear bias in what they consider benefits and what they measure as costs? Firstly, there's a clear bias on the part of the agencies and the administration pushing the regulations.

http://www.economist.com/node/21547772

The article talks about wildly inflated benefits of environmental regulations while under-emphasizing the costs. Often, looking at regulations in the past, the benefits of the Clear Air Act, for example, will show how the healthcare costs from reducing public health concerns will amount to a measurable, sizable impact in the future and how those gains will ultimately impact society. However, for costs, only direct costs are considered. However, very little analysis is done into the long-term economic effects of these regulations and any indirect impacts that this has had since 1970 to 1990 (closing of factories, loss of jobs, poverty assistance, healthcare from the resulting unemployment, etc, etc). Reading through these it's hard to justify that even analyzing after the fact, that the agencies are doing an accurate assessment on the impact of these regulations. Look at how bare the economic cost is in the impact analysis.

https://www.epa.gov/sites/production/files/2015-06/documents/contsetc.pdf
https://www.epa.gov/sites/production/files/2015-08/documents/cpp-final-rule-ria.pdf

I don't understand why anyone wouldn't support continual assessment and adjustment of our regulatory system and actively work on eliminating political bias from the analysis process.

[2buttons]

I appreciate the point, albeit reductio ad absurdum, but I think its an oversimplification.  To be sure, you need regulation, but when it crosses the threshold where, to use everyone's favorite argument these days, manufacturing flees the country to overseas competitors and you have places like Detroit going south it gives me pause. 

[golden1]

Even if you don't care one iota about protecting people's health and natural resources for ethical and moral reasons, focusing solely on short term economic growth is foolish.  Aren't we interested in remaining competitive in the long term?  A good regulation protects the resources needed in order to keep society going not just now, but decades from now.  Stripping regulations usually means declines in the health of workers, pollution or resources, etc....  It is in our financial best interest to protect these things. 

Honestly, I think we as humans are really poorly equipped to recognize dangers that we can't directly sense or understand.  At my job site, we have respirators and gloves that we wear because there are solvents that are harmful.  Strapping on a respirator and putting on gloves takes time, and maybe costs each worker 15 minutes a shift worth of time.  People bitch and moan about it, and yes, I suppose we could gain productivity in the short term by getting those man hours back, but then there is the possibility of someone getting sick, or overcome by fumes, perhaps a chemical exposure.  But if we told people at work that they didn't have to wear gloves, you bet your ass they would stop doing it.  Because we are short term creatures living in a long term world. 

I guess my question is, what is the point of having a robust economy if it costs your life, your health or destroys the habitat around you piece by piece?  What is the point of even living in a society at that point? 

[Yaeger]

Even if you don't care one iota about protecting people's health and natural resources for ethical and moral reasons, focusing solely on short term economic growth is foolish.  Aren't we interested in remaining competitive in the long term?  A good regulation protects the resources needed in order to keep society going not just now, but decades from now.  Stripping regulations usually means declines in the health of workers, pollution or resources, etc....  It is in our financial best interest to protect these things. 

Honestly, I think we as humans are really poorly equipped to recognize dangers that we can't directly sense or understand.  At my job site, we have respirators and gloves that we wear because there are solvents that are harmful.  Strapping on a respirator and putting on gloves takes time, and maybe costs each worker 15 minutes a shift worth of time.  People bitch and moan about it, and yes, I suppose we could gain productivity in the short term by getting those man hours back, but then there is the possibility of someone getting sick, or overcome by fumes, perhaps a chemical exposure.  But if we told people at work that they didn't have to wear gloves, you bet your ass they would stop doing it.  Because we are short term creatures living in a long term world. 

I guess my question is, what is the point of having a robust economy if it costs your life, your health or destroys the habitat around you piece by piece?  What is the point of even living in a society at that point?

Whoa, you're assuming that short term economic growth is unrelated to long-term growth? There needs to be a focus on both, as they are related.

You're right that it will have an impact to the worker, which is why I think that employers should fundamentally change the way they handle compliance costs. Instead of paying for it through the business, they should levy a fee on the employees and have the compliance costs directly deducted from their wages like a tax, where the employee can directly see the effects. They should do this for utility costs to consumers and auto-manufacturers as well. Make the process much more transparent to the average voter.

[gaja]

Let us look at a completely different regulation: building permits. There was a very interesting court case in Norway not long ago. An avalanche had destroyed five mountain cabins, and the insurance companies debated whether they were liable:

Cabin A, B and C were built in 1983
Cabin D and E were built in the 90s

All of these got permits from the municipality. Was the municipality responsable for the loss? Should they have known about the danger? According to the planning laws from the 70s, "natural dangers" should be investigated before a permit is given. The cost of these investigations is the responsibility of the one who wants to build. Experts knew about the avalance danger in the area, there were maps dated in the 60s and 70s stored at the Norwegian Geographical Investigation. In 1988, a new danger zone map was made, and this was sent directly to the municipality, who put it nicely in a drawer and never looked at it.

The court decided that the normal procedures for building permits in the 80s did not include avanlanche mapping. The municipality could have asked for this, but it was ok that they didn't. The insurance company paid for cabins A-C. When the permits for the new cabins were given in 1992, the municipality had gotten new information (even though they hadn't looked at it), and the standards for regulations had increased. The municipality should have asked the builder to investigate the dangers of avalanches. If they had done this, they would have seen that cabin D was inside the danger zone, while cabin E was outside. The insurance company refused to pay for cabin D, and the court ordered the municipality to hand over the cash.


The danger zone mapping part of building permits is getting larger and larger, and more and more expensive. The cost of this lies at the builder. Most of the time there is no problem, the avalanche doesn't happen. But when it does, it is very costly. According to the insurance companies, paying more for investigation and permits is cheaper for society than paying when the disaster strikes. On the other side; we are now seeing entire town on the west coast being put on ice: no building permits are given because they are going to be struck by a tsunami within the next couple of thousand years (tomorrow or in the year 5200; nobody knows. This movie shows how it could be: https://www.youtube.com/watch?v=sIj4v8TfnyU).

[Norioch]

You're right that it will have an impact to the worker, which is why I think that employers should fundamentally change the way they handle compliance costs. Instead of paying for it through the business, they should levy a fee on the employees and have the compliance costs directly deducted from their wages like a tax, where the employee can directly see the effects. They should do this for utility costs to consumers and auto-manufacturers as well. Make the process much more transparent to the average voter.

Businesses have thousands of costs from thousands of sources. Compliance with government regulations isn't special in that regard. Should every single miscellaneous cost associated with running a billion dollar corporation be broken down line-item and listed on every employee's paycheck, deducted from the hypothetical higher wage the employee might earn if the company didn't face that cost?

[ooeei]

I appreciate the point, albeit reductio ad absurdum, but I think its an oversimplification.  To be sure, you need regulation, but when it crosses the threshold where, to use everyone's favorite argument these days, manufacturing flees the country to overseas competitors and you have places like Detroit going south it gives me pause.

Maybe we should give people in Detroit free plane tickets to these places where the manufacturers moved?  I assume life is much better in those places since the lack of regulations allows people to be paid more and all that.

Regulations are just part of the free market.  If you don't like working in a place with regulations, move elsewhere!  I'm sure Indian and Chinese manufacturers would love to have more English speakers in their ranks.


I've worked in the pharmaceutical, and now oil/gas industry, and I see the waste that happens due to regulations.  There's plenty of it, but it's very needed in many instances.  Let's just say if I go to a hospital and they have IV bags made in China, and IV bags made in the US, I'm going to get the US ones no matter how much more expensive they are.  No way I'm injecting that stuff into my body without knowing it's RIDICULOUSLY restricted in how it can be made and the quality checks are all in place.  A person working on an assembly line isn't qualified to decide what is or isn't a "big deal" if something goes wrong, yet they'd make those calls all the time if you let them.  Sometimes it'd be to hit their numbers, other times to avoid getting in trouble for messing up, and sometimes with good intentions. 

I'd also hesitate to buy land anywhere near an oil rig in a developing country.  People here get pissy that they can't just flush toxic shit down the sink in the middle of the city.  The only reason they don't is the company will get busted for it, therefore they'll get busted for it.  If there was a simple way to charge people for externalities without regulations, I'd be open to considering that.  As it stands there's not much incentive to reduce emissions or keep wastewater clean without regulations. 

Safety regulations are just a good excuse safety officers and cautious employees can use when someone wants them to do something unsafe.  It's a good fallback instead of having to argue with "come on just do it, this is how we always do it and we're fine" where you have to be the bad guy.  You can say "sorry, we'll get in trouble for that shit, the regulations sure do suck, huh!"

[2buttons]

Maybe we should give people in Detroit free plane tickets to these places where the manufacturers moved?  I assume life is much better in those places since the lack of regulations allows people to be paid more and all that.

Regulations are just part of the free market.  If you don't like working in a place with regulations, move elsewhere!  I'm sure Indian and Chinese manufacturers would love to have more English speakers in their ranks.

I find this suggestion troubling on multiple fronts. A unemployed manufacturing worker should get shipped to India or China?  Really? Seems at best unkind.   

I also do love the old, don't like it leave argument.  C'mon this is what Democracy is all about. The ability to debate issues.  Its not my way or the highway.  I never suggested that we should have zero regulation.  I think its entirely fair to look at regulation and see if its worthwhile, in our interest, and factor in our ability to compete as a country.  That's not absurd and is in fact what our government does on a regular basis, or at least tries to do. 

I do agree that Chinese imports are scary.  There is a ton of bad stuff coming out of there that many Americans do not know about, and I am not talking about baby formula, toys, or pet food that were in the news.  Caveat Emptor for sure.

[GuitarStv]

I don't understand why anyone wouldn't support continual assessment and adjustment of our regulatory system and actively work on eliminating political bias from the analysis process.

Is there a single post in this thread where someone indicated that they wouldn't support continual assessment and adjustment of our regulatory system?  Or a post advocating at increasing political bias in the analytical process?  You seem to be tilting at windmills.

[Northwestie]

I don't understand why anyone wouldn't support continual assessment and adjustment of our regulatory system and actively work on eliminating political bias from the analysis process.

Is there a single post in this thread where someone indicated that they wouldn't support continual assessment and adjustment of our regulatory system?  Or a post advocating at increasing political bias in the analytical process?  You seem to be tilting at windmills.

It's called a straw dog argument.  The only way to keep this rust-bucket of a supposition afloat.

[2buttons]

Your first response on this thread ended with "what a bunch of crock."

I don't agree with everything Yaeger has said, but I think it is fair for him to challenge when the first three responses were an absolute rejection of the idea that maybe, just maybe, the academics at George Mason University might be on to something in their study suggesting a 0.8% reduction in annual growth of GDP due to the proliferation of regulation under the current Administration.

ACA, and Dodd-Frank, I am sure are probably the bulk of the regulation especially when he had a Dem controlled congress, although I have watched the EPA regs flowing out at a breakneck speed. 

I am sure there is probably some good regulation that has come out, but I am sure there is probably a ton of baloney as well, and anything left unchecked is damaging to our society.  Under the Republicans and GWB Administration, there was a lot of garbage that came out...a number of provisions in the Patriot Act.  So neither party has a lock on brilliance. In fact, usually the best stuff comes out when both sides compromise.  They are not going to do that if their constituents continue to be polarized, entrenched in their positions, and let ideology rule the day. 

[swashbucklinstache]

Buttons, I think you and I are probably not in agreement on many things politically. Not you specifically, but I think many of the people on your "side" of this discussion seemed to initially be not hearing when others were saying "of course there are both costs and benefits to regulations, but to decide if specific regulations are good or bad, a net drag, we need to weigh both sides of those," and it made the discussion and initial posting of the thread somewhat silly, as a few other posters have pointed out (i.e. "regulations obviously have direct costs"). I felt that "side" detracted from what could have been a more productive conversation about whether the facts, imperfect and idiosyncratic as they almost must be for this topic, favored more or less regulation in specific industries/cases.

I also think that your last few posts have been rational, informative, I agree with the ideas a lot, and I particularly like that you've presented your thoughts in a calm, clear way even when some have read a lot of unfair intention into your words. Rational discourse! On the internet of all places! So, thank you for that, and please keep posting on the thread if you have further thoughts and not be discouraged by those who don't want to have a discussion, from either "side." That last bit is mostly what I'm commenting to say as I'm interested in the discussion.

I'll also say, for everyone, that problems like "how much regulation should we have" are almost intractable and you're not going to find a one-size fits all solution. I think people generally understand this and that's why people generally want costs/benefits of policies. It's really hard work to do well. That said, I'd encourage everyone not to form opinions on these things without looking at/for multiple peer-reviewed studies on the subject. It's fine if you don't, but don't be afraid to change your opinion when they facts change or you are exposed to them properly. That goes for people across the spectrum.

[Tyson]

Getting rid of regulations in business is like saying lets get rid of rules in sports.  After all, think how much more awesome the game would be if the athletes and coaches could all just self-regulate!

[ooeei]

Maybe we should give people in Detroit free plane tickets to these places where the manufacturers moved?  I assume life is much better in those places since the lack of regulations allows people to be paid more and all that.

Regulations are just part of the free market.  If you don't like working in a place with regulations, move elsewhere!  I'm sure Indian and Chinese manufacturers would love to have more English speakers in their ranks.

I find this suggestion troubling on multiple fronts. A unemployed manufacturing worker should get shipped to India or China?  Really? Seems at best unkind.   

I also do love the old, don't like it leave argument.  C'mon this is what Democracy is all about. The ability to debate issues.  Its not my way or the highway.  I never suggested that we should have zero regulation.  I think its entirely fair to look at regulation and see if its worthwhile, in our interest, and factor in our ability to compete as a country.  That's not absurd and is in fact what our government does on a regular basis, or at least tries to do. 

I do agree that Chinese imports are scary.  There is a ton of bad stuff coming out of there that many Americans do not know about, and I am not talking about baby formula, toys, or pet food that were in the news.  Caveat Emptor for sure.

I didn't say ship them to China, I said give them a free ticket there.  That way they have the opportunity to go to the great land without regulations where they get all of the great benefits that entails! 

My point was to illustrate that companies going to other countries doesn't necessarily mean we have too many regulations.  It might (and in this case, does) mean that the other countries are UNDER regulated, and their citizens are paying the price for it (although maybe not with money).  The lack of regulations in those places does NOT mean the people there get paid more than the people here. Hence, someone from here would rather stay here even without those companies than to go to the countries where the jobs moved.

I suppose I'm more responding to the point that OP has been implying (while being very careful not to explicitly make it) that regulations are what causes poor people to be poor.  The implication being that if you support regulations, you support keeping the poor poor.  Yet we look at places like China or India where these jobs are moving, and people there aren't doing any better than the folks here.  In fact they're often doing far worse.  They aren't making more money, and they aren't getting the benefits that regulations give us here.

If all the OP and you are trying to say is "regulations have costs and benefits that are hard to quantify, and we should make sure every regulation makes sense before paying for it" I think this thread is pretty pointless. You're going to be hard pressed to find anyone who disagrees with that.  The implication of the thread is we have too many regulations and it's destroying our economy and lower class. 

A few posters seem to be trying their hardest to ignore the positive sides of the regulations for the poor.  For example, no matter how poor you are in America, clean water is very easy to come by.  That's a benefit with tremendous value.  In other countries it may look like the numbers work out because the lack of regulations allows dumping in public water sources, and it's nearly impossible to quantify the value of a few thousand people not having access to clean water.  Maybe it results in those people having to just drink the dirty water, and they die sooner/more often?  What's the dollar value put on that consequence?  I mean, nobody is having to pay any MONEY to clean the water, so it's a benefit to the company with no monetary cost to society.  The cost is paid in health and lives, but the value of it can change by orders of magnitude depending how you value a human life.  The same can be said of emissions, or safety. 

How do you quantify the loss of a rainforest in $?  What if that rainforest had a plant in it that could have been used to derive a medicine?  A cure for cancer?  High blood pressure medicines were derived from a snake venom, HIV medication was derived from an ocean sponge.  Destroying the habitat of either of these things before the medicine was made would have shown very little economic consequence in any analysis because you don't know what you never had.  Situations that cannot be predicted like this are why any economic analysis of regulation cost/benefit is only a very loose estimate, and only one of many things that needs to be considered in the creation/implementation of a regulation. 

[EnjoyIt]

No one on this thread denies the benefits of some regulations.  And for every good regulation you pull out another person can pull out a bad regulation.  Although some regulations have beneficial consequences other regulations have detrimental consequences.

We need to accept that adding more regulations will have a cost.  The cost may be a big benefit to society as a whole, but it will cost money to implement.  That money will come from lower wages and decreased growth of the industries that get regulated.  I personally see it in our healthcare industry that is riddled with tons of regulation.  Some add a benefit to patients and society, some just cost money with little to no benefit at all.  Unfortunately once a regulation is added it takes a massive force to alter or take it away.

[projekt]

- Extrapolated into a 25% reduction in the size of the U.S. economy in 2012, or an economy that was $4 trillion smaller (nearly $13,000 per American) than it would have been in the absence of regulatory growth.

I found it surprising that the growth of regulations is responsible for a loss of $13,000 per capita in annual wages of economic growth since 1980. Also, assuming that our current trend towards increasing regulations continue, we're probably looking at a greater reduction in economic growth and increased poverty. Which ultimately yield less opportunity, more inequality, etc.

How do you think this will effect your FIRE plans in the long term?

Let's accept their numbers at face value, but put them in context.

Since 1990, real household median income has stayed about the same while per capita GDP has more than doubled. Would an additional change in per capita GDP be much more likely to go to the majority of Americans? I think it's unlikely to affect most people's take-home pay. Since we don't know what the world would look like without regulations, it's hard to say whether eliminating them would be a net benefit.

So, no, it doesn't affect my FI plans at all and I'm pretty unconcerned about it.

There is a relevant MMM article: http://www.mrmoneymustache.com/2013/10/07/how-big-is-your-circle-of-control/

--
http://www.statista.com/statistics/200838/median-household-income-in-the-united-states/
http://data.worldbank.org/indicator/NY.GDP.PCAP.CD

[2buttons]

I think its time for a refresher.....

http://www.investopedia.com/ask/answers/199.asp

What is GDP and why is it so important to economists and investors? By Investopedia Staff | Updated April 24, 2016 — 6:30 PM EDT
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A:
The gross domestic product (GDP) is one of the primary indicators used to gauge the health of a country's economy. It represents the total dollar value of all goods and services produced over a specific time period; you can think of it as the size of the economy. Usually, GDP is expressed as a comparison to the previous quarter or year. For example, if the year-to-year GDP is up 3%, this is thought to mean that the economy has grown by 3% over the last year.

Measuring GDP is complicated (which is why we leave it to the economists), but at its most basic, the calculation can be done in one of two ways: either by adding up what everyone earned in a year (income approach), or by adding up what everyone spent (expenditure method). Logically, both measures should arrive at roughly the same total.

The income approach, which is sometimes referred to as GDP(I), is calculated by adding up total compensation to employees, gross profits for incorporated and non incorporated firms, and taxes less any subsidies. The expenditure method is the more common approach and is calculated by adding total consumption, investment, government spending and net exports.

As one can imagine, economic production and growth, what GDP represents, has a large impact on nearly everyone within that economy. For example, when the economy is healthy, you will typically see low unemployment and wage increases as businesses demand labor to meet the growing economy. A significant change in GDP, whether up or down, usually has a significant effect on the stock market. It's not hard to understand why: a bad economy usually means lower profits for companies, which in turn means lower stock prices. Investors really worry about negative GDP growth, which is one of the factors economists use to determine whether an economy is in a recession.

For more on this topic, see Is real GDP a better index of economic performance than GDP? and Macroeconomic Analysis. To stay on top of the latest macroeconomic news and analysis, sign up for our free News to Use newsletter.


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