Author Topic: Regulations are a really big drag on US growth  (Read 43424 times)

Yaeger

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Regulations are a really big drag on US growth
« on: May 20, 2016, 04:59:10 PM »
I read an interesting article analyzing the cumulative cost of federal regulations and its effect on the economy. Some interesting points from the article and study (both below):

- Estimates of the regulatory burden on the U.S. economy range upwards of more than $2 trillion per year, or more than 10% of GDP

- 0.8% annual drag on real GDP growth since 1980

- 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.

https://www.aei.org/publication/regulations-are-a-really-big-drag-on-us-growth/?utm_source=facebook&utm_medium=social&utm_campaign=perryregulationsalag

Study:
http://mercatus.org/publication/cumulative-cost-regulations?utm_source=Email&utm_medium=twam&utm_campaign=RSP

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

tobitonic

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Re: Regulations are a really big drag on US growth
« Reply #1 on: May 20, 2016, 05:04:59 PM »
I think these "findings" are absolute rubbish, and income inequality and the resulting unemployment, poverty, and crime it produces will have far greater effects on the welfare of my family in the long term.

Northwestie

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Re: Regulations are a really big drag on US growth
« Reply #2 on: May 20, 2016, 05:15:19 PM »
These studies always crack me up.  It's interesting how they try and account for "slower growth" because of such crazy regulations such as worker health and safety, clean water, clean air, and noise pollution.  But - you never see these Club for Growth advocates then apply the same economic rigor to the external costs of worker injuries to families, health and well being from water or air pollution, or whatever

Agreed, what a bunch of crock.

forummm

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Re: Regulations are a really big drag on US growth
« Reply #3 on: May 20, 2016, 05:31:55 PM »
You do realize that these people are paid to sound official and make up numbers that are totally biased in the direction that their funders want people to believe are true, right? Then they get referred to by partisans as "a study" which makes it sound like it must be worth listening to.

Yaeger

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Re: Regulations are a really big drag on US growth
« Reply #4 on: May 20, 2016, 05:38:18 PM »
Gotcha.


Norioch

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Re: Regulations are a really big drag on US growth
« Reply #5 on: May 20, 2016, 05:41:10 PM »
There are good regulations and bad regulations. You have to actually look at each proposed or existing regulation individually to evaluate its costs and benefits. Some regulations which were genuinely useful and beneficial when they were first implemented have outlived their usefulness due to changing times, and we'd collectively be better off if they were lifted. Many other regulations have been lifted prematurely, with harmful effects.

To people on both sides on the political spectrum: don't be an ideologue! I know it's hard work to do the thought to actually evaluate things individually, but not every regulation is good and not every regulation is bad.

human

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Re: Regulations are a really big drag on US growth
« Reply #6 on: May 20, 2016, 05:42:56 PM »
I can't believe anyone still believes the invisible hand will ensure product and worker safety. Sure regulations can be a burden but I kind of like the end to child labour, reduction of worker deaths and recalls of products that are dangerous. I'll keep the regs thank you very much.
« Last Edit: May 20, 2016, 05:59:51 PM by human »

Yaeger

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Re: Regulations are a really big drag on US growth
« Reply #7 on: May 20, 2016, 05:59:02 PM »
I can't believe anyone still believe's the invisible hand will ensure product and worker safety. Sure regulations can be a burden but I kind of like the end to child labour, reduction of worker deaths and recalls of products that are dangerous. I'll keep the regs thank you very much.

That's the whole point of the study. You can keep the regulations, but realize the damage it does to society. When you're arguing for workers to be paid a living wage, poverty or income inequality it's these very things keeping them 'safe' that keeps them poor, uneducated, and sick.

Regulatory compliance costs are a very large burden on employers. Next time you talk to someone that's genuinely poor, just say "sorry man, but we really need safety labels and MSDS sheets on bathroom cleaner more than we need you. I hope you understand."

human

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Re: Regulations are a really big drag on US growth
« Reply #8 on: May 20, 2016, 06:03:51 PM »
What a twisted argument, no regulations will suddenly lead to restaurant workers making the big bucks? Seriously? You would just get employees who get hurt on the job being fired, they would somehow be better off and richer for it? Tons of overhead reduces profit which forces companies to reduce labour costs. I get it, but left to their own devices there would be no floor just an abyss.

Yaeger

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Re: Regulations are a really big drag on US growth
« Reply #9 on: May 20, 2016, 06:19:20 PM »
What a twisted argument, no regulations will suddenly lead to restaurant workers making the big bucks? Seriously? You would just get employees who get hurt on the job being fired, they would somehow be better off and richer for it? Tons of overhead reduces profit which forces companies to reduce labour costs. I get it, but left to their own devices there would be no floor just an abyss.

Really, you think employees have zero say in the conditions of their employment? You do realize that by doing that you give them the an increased ability to walk out of a company if they don't agree with the policies or safety conditions. They're not slaves, and if they're paid significantly more, they have far more bargaining power with the employer.

But you're right, I think workers deserve lower pay, reduced benefits, and fewer opportunities to make you feel like you're doing a social duty by telling imposing more conditions on their employment. After all, they're stupid and helpless without us social warriors, right?

human

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Re: Regulations are a really big drag on US growth
« Reply #10 on: May 20, 2016, 06:27:22 PM »
Regulations for workers usually do not create a ceiling just a floor to protect low paying workers. I've worked in paycheck to paycheck jobs and if it wasn't for regulations and worker safety bureaus and obligatory insurance I would have lost my job and had zero pay when I was injured (at work) and out of work for several weeks. I suppose your argument is that the ceiling could be higher?

MrFrugalChicago

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Re: Regulations are a really big drag on US growth
« Reply #11 on: May 20, 2016, 06:30:23 PM »
I think we found the Trump supporter

Yaeger

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Re: Regulations are a really big drag on US growth
« Reply #12 on: May 20, 2016, 06:39:04 PM »
Regulations for workers usually do not create a ceiling just a floor to protect low paying workers. I've worked in paycheck to paycheck jobs and if it wasn't for regulations and worker safety bureaus and obligatory insurance I would have lost my job and had zero pay when I was injured (at work) and out of work for several weeks. I suppose your argument is that the ceiling could be higher?

Employers don't care about the ceiling you see. They care about the total cost per worker. That includes taxes, regulatory costs, liabilities, employee benefits, and other random costs. If that total cost, plus wages and benefits you see, exceed the benefit you bring to the company you don't get hired. Essentially if an employer has to pay insurance, it'll calculate the rate of injurty, the cost of insurance, and then dock your wages to pay for the insurance as a cost (a little more complicated).

So yes, those costs do lower your pay ceiling. In most cases they probably provide more insurance than you'll likely need, to cover their asses, so it'll cost you more than any benefit you're receiving. There's no free lunch.

human

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Re: Regulations are a really big drag on US growth
« Reply #13 on: May 20, 2016, 06:42:37 PM »
thanks for explaining the concept of insurance to me? Obviously a safer workplace and a safety net for hurt employees costs money and that is passed on to consumers. What's the alternative, get hurt and go to the poor house and live an indentured life?

Yaeger

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Re: Regulations are a really big drag on US growth
« Reply #14 on: May 20, 2016, 06:59:03 PM »
thanks for explaining the concept of insurance to me? Obviously a safer workplace and a safety net for hurt employees costs money and that is passed on to consumers. What's the alternative, get hurt and go to the poor house and live an indentured life?

Sue? The legal system would still function. You still have medical insurance?

Besides, you have this misconception that it would be in the employer's best interest for workers to die, be horribly maimed, etc. As a manager, I can tell you that this would be devastating, regardless of any rules, regulations, or laws. You can put up all the safety crap you want, if the worker doesn't care about their own safety it doesn't matter.

Or do you think that organizational theory is still stuck in the 1700's and no one cares about these things? Hiring and training people is a pain in the butt, with a significant investment of time and energy. What benefit would it be for me to allow someone to be mutilated? What would that do to the employees and managers, to morale? To the company?

human

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Re: Regulations are a really big drag on US growth
« Reply #15 on: May 20, 2016, 07:00:36 PM »
Ha a withering away of the state! Didn't realize you were a communist all this time!

RetiredAt63

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Re: Regulations are a really big drag on US growth
« Reply #16 on: May 20, 2016, 07:18:55 PM »
Employers shirking safety regulations are alive and well in the construction industry here.   Small operations, too many injuries, they declare bankruptcy or simply close,then re-open under another name.

Depressed areas, few jobs, companies can shirk safety regulations.
Not that long ago in the total scheme of things-1992 - http://www.thecanadianencyclopedia.ca/en/article/westray-disaster/
I met a someone who had worked in that mine once, he had changed jobs just before the explosion, and had serious survivor's guilt.

If there were no regulations or lax ones, this sort of thing would be common.  We know it happens in third world countries desperate for investment.

thanks for explaining the concept of insurance to me? Obviously a safer workplace and a safety net for hurt employees costs money and that is passed on to consumers. What's the alternative, get hurt and go to the poor house and live an indentured life?

Sue? The legal system would still function. You still have medical insurance?

Besides, you have this misconception that it would be in the employer's best interest for workers to die, be horribly maimed, etc. As a manager, I can tell you that this would be devastating, regardless of any rules, regulations, or laws. You can put up all the safety crap you want, if the worker doesn't care about their own safety it doesn't matter.

Or do you think that organizational theory is still stuck in the 1700's and no one cares about these things? Hiring and training people is a pain in the butt, with a significant investment of time and energy. What benefit would it be for me to allow someone to be mutilated? What would that do to the employees and managers, to morale? To the company?

bobechs

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Re: Regulations are a really big drag on US growth
« Reply #17 on: May 20, 2016, 07:28:27 PM »




Which one is you?

They all have their asses showing, so it's hard to tell...

Yaeger

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Re: Regulations are a really big drag on US growth
« Reply #18 on: May 20, 2016, 07:35:37 PM »
Employers shirking safety regulations are alive and well in the construction industry here.   Small operations, too many injuries, they declare bankruptcy or simply close,then re-open under another name.

Depressed areas, few jobs, companies can shirk safety regulations.
Not that long ago in the total scheme of things-1992 - http://www.thecanadianencyclopedia.ca/en/article/westray-disaster/
I met a someone who had worked in that mine once, he had changed jobs just before the explosion, and had serious survivor's guilt.

If there were no regulations or lax ones, this sort of thing would be common.  We know it happens in third world countries desperate for investment.

Like I've said over, and over, and over again. You can enjoy the increased safety requirements, but you have to accept the consequences of those requirements. Don't put your head into the sand and pretend they don't exist. Don't pretend there isn't an implied trade-off that's costing you.

Norioch

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Re: Regulations are a really big drag on US growth
« Reply #19 on: May 20, 2016, 07:42:37 PM »
Yes, regulations have costs as well as benefits. Sometimes the benefits outweigh the costs. Not always, but sometimes!

Yaeger

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Re: Regulations are a really big drag on US growth
« Reply #20 on: May 20, 2016, 07:53:46 PM »
Yes, regulations have costs as well as benefits. Sometimes the benefits outweigh the costs. Not always, but sometimes!

Federal regulatory agencies are required to conduct impact analyses on any "economically significant rules," defined as those with a cost exceeding $100 million per year. Most attempts to quantify the costs of regulations — compliance, the purchase of new equipment, additional staffing needs — examine each regulation individually and assess the marginal impact along with the potential benefit.

Social benefits of the regulations are taken into account in the study. Well, as close as a federal agency can use a Cost Benefit Analysis towards monetizing the benefit. This study is more detail oriented and focuses more on micro-economic analysis instead of macro.

Maybe this article describes the study better:
http://www.msn.com/en-us/money/markets/the-crushing-cost-of-regulation-dollar4-trillion-since-1980/ar-BBt9uOP?li=BBnbfcN

For the lefties, from a source you can trust from previous, similar studies. This isn't new stuff:
http://www.huffingtonpost.com/dustin-siggins/the-overlooked-harm-of-ov_b_6699222.html
http://www.forbes.com/sites/waynecrews/2014/09/10/hairball-the-cost-of-federal-regulation-to-the-u-s-economy/#283dd9f86a91
« Last Edit: May 20, 2016, 08:05:34 PM by Yaeger »

MilesTeg

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Re: Regulations are a really big drag on US growth
« Reply #21 on: May 20, 2016, 08:06:47 PM »
It does us no good whatsoever to allow businesses and other economic actors to externalize costs with activities such as pollution, worker abuse, etc. It might look better on paper, but it's mortgaging both our future and value that is not quantifiable in dollars.

No doubt there is also some bad regulations;perfection is not in the nature of humanity.

MilesTeg

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Re: Regulations are a really big drag on US growth
« Reply #22 on: May 20, 2016, 08:14:17 PM »
For example, this is what a county looks like when there are no environmental regulations (i.e. some of the most financially burdensome regulations that exist):









The amount of just financial damage that that sort of environmental abuse tallies to far exceeds the cost of regulation. Not to mention non-financial costs.

Yaeger

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Re: Regulations are a really big drag on US growth
« Reply #23 on: May 20, 2016, 08:17:50 PM »
It does us no good whatsoever to allow businesses and other economic actors to externalize costs with activities such as pollution, worker abuse, etc. It might look better on paper, but it's mortgaging both our future and value that is not quantifiable in dollars.

No doubt there is also some bad regulations;perfection is not in the nature of humanity.

What looks good on paper reflects what's true in practice. The next time you hear someone talk about low wages and 'greed', mention the detrimental effects of well-intentioned policies and regulations contributing towards their poverty.

There's a reason the economy is stagnating and why Obama is the only modern President that hasn't seen economic growth above 3%. There's a reason that Americans will continue to get poorer and more unequal. This is a large part of that reason and will be a large contributor towards a future decline in standard of living, poverty, misery, and pain. That's the trade off we're making. Our public is choosing to buy bonds because they're safe, instead of stocks, and it'll hurt us come retirement.

Yaeger

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Re: Regulations are a really big drag on US growth
« Reply #24 on: May 20, 2016, 08:21:12 PM »
For example, this is what a county looks like when there are no environmental regulations (i.e. some of the most financially burdensome regulations that exist):

The amount of just financial damage that that sort of environmental abuse tallies to far exceeds the cost of regulation. Not to mention non-financial costs.

Environmental regulations are a tiny piece of the pie. Also, are you assuming that we'd do the same? We weren't even THAT bad prior to the establishment of the EPA in 1970. The study takes into account regulations after 1980. Nice strawman but it's not relevant to the topic.

MilesTeg

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Re: Regulations are a really big drag on US growth
« Reply #25 on: May 20, 2016, 08:33:51 PM »
Quote from: Yaeger
What looks good on paper reflects what's true in practice. The next time you hear someone talk about low wages and 'greed', mention the detrimental effects of well-intentioned policies and regulations contributing towards their poverty.

Hah! If you believe that I have a bridge to sell you...

What looks good on paper most certainly is not always reflective of what's actually good. If "what's on paper" does not thoroughly describe the totality of the situation, "what's on paper" is utter trash. Take, for example, environmental regs as already brought up. On paper, environmental regs are a HUGE drain on the economy.

But that "paper" often leaves out that the only way it looks good is if you ignore the externalized costs of not making economic actors take on the cost associated with their use of resources. It's easy to make it look good on paper if you ignore those externalized costs. Sadly, the real world can not ignore those costs, and all you are doing by removing environmental regs is putting the cost of pollution and resource misuse into the hands of society at large (i.e. government) which is the entity least capable of efficiently dealing with such costs.

Your "paper" is a great example of this type of grossly incomplete analysis.

For example, this is what a county looks like when there are no environmental regulations (i.e. some of the most financially burdensome regulations that exist):

The amount of just financial damage that that sort of environmental abuse tallies to far exceeds the cost of regulation. Not to mention non-financial costs.

Environmental regulations are a tiny piece of the pie. Also, are you assuming that we'd do the same? We weren't even THAT bad prior to the establishment of the EPA in 1970. The study takes into account regulations after 1980. Nice strawman but it's not relevant to the topic.

The introduction of environmental regulations did not start in 1970. You need to better familarize yourself with history. You can start by looking up "the roaring 20s" which is a nice twofer historical example of the needs for environmental and financial regulations. Spoiler: 1920s new york did not look a whole lot different from 2010s Bejing.

Also very cute attempt to brush aside a very topical example by claiming it's a "strawman". Given what I have read from you, I expect further hilarity to ensue.

Yaeger

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Re: Regulations are a really big drag on US growth
« Reply #26 on: May 20, 2016, 08:56:37 PM »
What looks good on paper most certainly is not always reflective of what's actually good. If "what's on paper" does not thoroughly describe the totality of the situation, "what's on paper" is utter trash. Take, for example, environmental regs as already brought up. On paper, environmental regs are a HUGE drain on the economy.

But that "paper" often leaves out that the only way it looks good is if you ignore the externalized costs of not making economic actors take on the cost associated with their use of resources. It's easy to make it look good on paper if you ignore those externalized costs. Sadly, the real world can not ignore those costs, and all you are doing by removing environmental regs is putting the cost of pollution and resource misuse into the hands of society at large (i.e. government) which is the entity least capable of efficiently dealing with such costs.

Your "paper" is a great example of this type of grossly incomplete analysis.

I wish you'd actually read it before making incorrect assertions that are covered in the paper. It uses the government agency's own CBAs on monetizing externalities to calculate the net cost. Plus, even if you disagree with the math, even liberal sources agree with the premise: Regulations cost the U.S. economy A LOT. It's not just money, but jobs, opportunity, prosperity, equality, etc.

Your argument is like someone saying 'on paper climate change looks promising.' You mean the 'on paper' data? You mean 'on paper' science? Or maybe you mean the 'on paper' recommendations that politicians use to make policies? /eyeroll

The introduction of environmental regulations did not start in 1970. You need to better familarize yourself with history. You can start by looking up "the roaring 20s" which is a nice twofer historical example of the needs for environmental and financial regulations. Spoiler: 1920s new york did not look a whole lot different from 2010s Bejing.

Also very cute attempt to brush aside a very topical example by claiming it's a "strawman". Given what I have read from you, I expect further hilarity to ensue.

Sigh. Again, the paper focuses on changes to regulations since the 1980s. It assumes that level remains consistent since 1980-era regulations and measures the growth of the regulatory burden to the economy. I don't remember 1980 America looking anything remotely like the pictures you showed, are you trying to make that connection? Or are you assuming that US and Chinese cultures are similar? Or are you disregarding the fact that a LOT of the pollution in China is due to government corruption and mismanagement?

Are you even trying, or just googling pictures without context to support your point?

chesebert

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Re: Regulations are a really big drag on US growth
« Reply #27 on: May 20, 2016, 08:58:03 PM »
Beijing's air quality has been steadily degrading over the past 5 years. It almost feels like every year is the worst year... Also, China does not lack regulations; enforcement is a different story however.

MilesTeg

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Re: Regulations are a really big drag on US growth
« Reply #28 on: May 20, 2016, 09:18:30 PM »
What looks good on paper most certainly is not always reflective of what's actually good. If "what's on paper" does not thoroughly describe the totality of the situation, "what's on paper" is utter trash. Take, for example, environmental regs as already brought up. On paper, environmental regs are a HUGE drain on the economy.

But that "paper" often leaves out that the only way it looks good is if you ignore the externalized costs of not making economic actors take on the cost associated with their use of resources. It's easy to make it look good on paper if you ignore those externalized costs. Sadly, the real world can not ignore those costs, and all you are doing by removing environmental regs is putting the cost of pollution and resource misuse into the hands of society at large (i.e. government) which is the entity least capable of efficiently dealing with such costs.

Your "paper" is a great example of this type of grossly incomplete analysis.

I wish you'd actually read it before making incorrect assertions that are covered in the paper. It uses the government agency's own CBAs on monetizing externalities to calculate the net cost. Plus, even if you disagree with the math, even liberal sources agree with the premise: Regulations cost the U.S. economy A LOT. It's not just money, but jobs, opportunity, prosperity, equality, etc.

From your paper: "We caution that our results are for the costs of regulation to the measurable economy (net any benefits to the measurable economy), but that does not imply that none of the regulations promulgated since 1981 have been net beneficial." (pp.35)

In other words, no, they are not attempting an analysis of all indirect or externalized costs or benefits. They are only looking at the direct costs vs economic productivity. In the authors' own words.

Quote
Your argument is like someone saying 'on paper climate change looks promising.' You mean the 'on paper' data? You mean 'on paper' science? Or maybe you mean the 'on paper' recommendations that politicians use to make policies? /eyeroll

LMAO. Nope, as shown yet again, this is a grossly imcomplete analysis of the overall cost/benefit of regulation. In the authors' own words.

Quote from: Yaeger
Sigh. Again, the paper focuses on changes to regulations since the 1980s. It assumes that level remains consistent since 1980-era regulations and measures the growth of the regulatory burden to the economy. I don't remember 1980 America looking anything remotely like the pictures you showed, are you trying to make that connection? Or are you assuming that US and Chinese cultures are similar? Or are you disregarding the fact that a LOT of the pollution in China is due to government corruption and mismanagement?

Are you even trying, or just googling pictures without context to support your point?

To quote you again: "Environmental regulations are a tiny piece of the pie. Also, are you assuming that we'd do the same? We weren't even THAT bad prior to the establishment of the EPA in 1970. The study takes into account regulations after 1980."

The idea that the magic hand of the free market is the optimal solution to all problems has been tried, and has never been shown to work. We certainly would head to where China currently is if we started stripping away regulations. We've already been there, so the idea that we wouldn't return if Laissez-fairism was re-instituted in the U.S. economy (i.e. what libertarians want) such as existed in the 1920s is a non-starter.

As demonstrated repeatedly throughout history, a mixed economy (i.e. well regulated markets) is the superior solution to the extremist solutions attempted (pure communism, pure capitalism)
« Last Edit: May 20, 2016, 09:35:32 PM by MilesTeg »

human

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Re: Regulations are a really big drag on US growth
« Reply #29 on: May 20, 2016, 09:21:55 PM »
Beijing's air quality has been steadily degrading over the past 5 years. It almost feels like every year is the worst year... Also, China does not lack regulations; enforcement is a different story however.

And this is why unfortunately a bureaucracy is needed for inspections, permits and investigations. Words (or regs) on paper are worthless without a regulatory regime to watch over them.

Yaeger

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Re: Regulations are a really big drag on US growth
« Reply #30 on: May 20, 2016, 09:52:57 PM »
From your paper: "We caution that our results are for the costs of regulation to the measurable economy (net any benefits to the measurable economy), but that does not imply that none of the regulations promulgated since 1981 have been net beneficial." (pp.35)

In other words, no, they are not attempting an analysis of all indirect or externalized costs or benefits. They are only looking at the direct costs vs economic productivity. In the authors' own words.

Those are covered in the Regulatory Impact Analysis conducted by the agencies, as applicable, for each major regulation. Give me your own study with what YOU think the total regulatory cost is. "I don't know" is not good enough.

https://www.whitehouse.gov/sites/default/files/omb/inforeg/regpol/circular-a-4_regulatory-impact-analysis-a-primer.pdf

To quote you again: "Environmental regulations are a tiny piece of the pie. Also, are you assuming that we'd do the same? We weren't even THAT bad prior to the establishment of the EPA in 1970. The study takes into account regulations after 1980."

The idea that the magic hand of the free market is the optimal solution to all problems has been tried, and have never been shown to work. We certainly would head to where China currently is if we started stripping away regulations. We've already been there, so the idea that we wouldn't return if Laissez-fairism was re-instituted in the U.S. economy (i.e. what libertarians want) such as existed in the 1920s.

As demonstrated repeatedly throughout history, a mixed economy (i.e. well regulated markets) is the superior solution to the extremism solutions attempted (pure communism, pure capitalism)

You're saying that without these rules we'd be the same as 1920's America or China of today? So.. rules are all that make us what we are today? You have a very pessimistic view of society and one I fundamentally disagree with.

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?


MilesTeg

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Re: Regulations are a really big drag on US growth
« Reply #31 on: May 21, 2016, 01:29:48 AM »

Those are covered in the Regulatory Impact Analysis conducted by the agencies, as applicable, for each major regulation. Give me your own study with what YOU think the total regulatory cost is. "I don't know" is not good enough.


What part of the gross, direct economic cost of the regulation is not the sum total of it's affects (good or bad) does not compute with you? Like I said, the authors are making NO claim that they are providing a full analysis of regulations and their total indirect and external costs and benefits.

I have no quarrel with the numbers they have; you just don't seem to grok that they aren't even attempting to account for the actual full economic, social, etc. impact (good or bad) of those regs. By their own admission.

You are trying to argue about the (direct only) cost of something without evaluating what other effects. Without that necessary analysis no reasonable conclusion (one way or the other) can be made. It's frankly, idiotic. It's like saying "well, cooking this food increases its cost by 80%, we should stop cooking food!"

Quote
You're saying that without these rules we'd be the same as 1920's America or China of today? So.. rules are all that make us what we are today? You have a very pessimistic view of society and one I fundamentally disagree with.

Yes, rules (e.g. government) are what is the basis of modern society. And your disagreement with reality is irrelevant. Even in 2016 american we quite happily ignore horrible environmental and societal ills (e.g. chinas ecological disaster and abuse of people) if we get shiny new toys cheaper and more profitably because of it.

It's a sad reality, but it is reality.

You're clearly an ideologue, and as with all ideologues you desperately want reality to conform to your pre-concieved ideas rather than accepting reality for what it is.

Quote
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?

Well regulated means making sure that the costs, including indirect, of businesses and their customers are taken on directly by those businesses and their customers instead of being foisted on society in general. Both because society should not be subsidizing corporations and because the costs of certain actions, such as pollution, are orders of magnitude MORE expensive to society if not taken care of promptly and correctly.

Put in a different way: Growth without sustainability it worthless. (just ask any competent businessman).

A great example is the area around Silverton, CO. You may recall a massive spill of toxic water into the Animas river a while back. That got a lot of attention, but the real disaster there is that that "massive" spill was actually just a drop in the bucket. The mines up there leak that much toxic waste in the Animas every couple days. Not to mention the innumerable tailings ponds that leech heavy metal and highly toxic chemical (e.g. cyanide) contamination into the watershed, open mine shafts, accidentally drained lakes, etc.

That situation is a perfect example of companies externalizing their costs and turning a manageable problem (proper containment/disposal of mine waste) into a full blown ecological disaster that will cost orders of magnitude more money (and more important things, like lives) to deal with now than if those companies had been held to better standards to begin with. There is now significant pollution from that area extending all the way to the pacific ocean. Millions of acres and billions of acre-feet of water seriously damaged.
« Last Edit: May 21, 2016, 01:33:21 AM by MilesTeg »

tarheeldan

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GrumpyPenguin

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Re: Regulations are a really big drag on US growth
« Reply #33 on: May 21, 2016, 05:54:24 AM »
OP, if you cite some articles in well respected peer-reviewed economics journals, folks might take this discussion more seriously. 

forummm

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Re: Regulations are a really big drag on US growth
« Reply #34 on: May 21, 2016, 07:38:47 AM »
OP, if you cite some articles in well respected peer-reviewed economics journals, folks might take this discussion more seriously. 

And talk about the benefits of regulations. Everyone agrees that regulations cost someone something--otherwise there would be no need for them. But the reason we do them is to provide the resultant benefits. In the CBAs the government does, the B is for benefit. So it's possible that we all could be earning more per year without any regulations. But the environment would be terrible, we'd all die earlier, there wouldn't be as much safety for our money, etc.

CBnCO

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Re: Regulations are a really big drag on US growth
« Reply #35 on: May 21, 2016, 07:39:36 AM »
Interesting topic and spirited debate for sure.

I'm more interested in contemplating regulations that are put in place to benefit certain corporate interests. For example, I believe that the "health care crisis" that the Affordable Care Act was put in place to solve was a crisis largely caused by a chain of government regulations that limited competition in the health care industry causing monopolies and restrictions on new market entrants. Energy companies, farmers, military contractors, bankers, etc..are all industries who have lobbied our elected officials (can you say campaign contributions, super-PACs, and paid speeches) into enacting and blocking laws to benefit them.

I believe that free trade and capitalism are the best generators of prosperity in a free society (which begs the question if we really want a free society?); but, unfortunately, our current system, due to overregulation, is not a true free market system. All historic experiments that I am aware of where the government tried to control the means of production and micro-manage the economy always led to corruption, inequality, and, ultimately, failure.

This is a very complex topic with no simple set of solutions. I'm glad to hear some differing perspectives. A happy weekend to all!





 


GetItRight

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Re: Regulations are a really big drag on US growth
« Reply #36 on: May 21, 2016, 08:03:23 AM »
Regulation stifles economic growth, reducing jobs and increasing cost of products and services. Money stolen by way of compulsory taxes is inefficient misallocation with a hefty amount stolen off the top as welfare for the rich and well connected ruling class. Government regulation and taxes are a tremendous burden that drives costs for everything higher and reduces quality of life.

forummm

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Re: Regulations are a really big drag on US growth
« Reply #37 on: May 21, 2016, 08:15:18 AM »
I'm more interested in contemplating regulations that are put in place to benefit certain corporate interests. For example, I believe that the "health care crisis" that the Affordable Care Act was put in place to solve was a crisis largely caused by a chain of government regulations that limited competition in the health care industry causing monopolies and restrictions on new market entrants.

I totally agree that we don't really have a free market society in many sectors because of government actions that are intended to benefit specific interests. Some of that is regulatory, but a lot of it is through the tax code, and some of it through the budget. My guess is that it's tax code>spending>regulatory in terms of effect.

That said, I think that healthcare is a disaster. But not because of over-regulation. Some aspects of it are arguably inefficient from a regulatory perspective (like not having any restrictions on pricing of drugs under patent monopoly). But mostly the industry has blown up because of 1) lack of regulation, 2) the innate aspects of healthcare that cause market failure under any free market system, 3) use of the tax code to promote spending on healthcare instead of salaries, 4) an attitude in America that we should always have more healthcare even if it's not needed care, 5) a system organized around paying healthcare providers to do more and bill more (they make more when you are sick than when you are healthy; they make more by providing stuff you don't need)--which is the model that most private insurance uses, and 6) terrible agricultural and advertising policy that lead to people shoveling huge amounts of sugars and refined carbohydrates into themselves (often without realizing it) that cause the diabetes, obesity, and other related health epidemics occurring (very expensively) in the US now.

But I'm interested in hearing why it is you believe that too much regulation is the problem in the health sector.

JustGettingStarted1980

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Re: Regulations are a really big drag on US growth
« Reply #38 on: May 21, 2016, 08:22:46 AM »
Hi Yaeger, I've read a few of your posts in different threads and you are pretty good at engaging the MMM community as kind of a devil's advocate.

Don't take this the wrong way, but I think you might benefit in the long run from volunteering in a homeless shelter, perhaps a soup kitchen, perhaps a local children's hospital or even a local library.  You don't seem to grog the whole "what benefits society benefits myself" thing.

So much of life and success stems from not just hard work, but also luck, your genetic IQ, your parents, your social contacts, your adequate mental health, your race, and even your country of origin.

Imagine being born in Shanghai with a genetic predisposition for asthma in the most polluted part of town? Not being able to breathe makes studying in school kind of a low priority.

I get your whole Atlas Shrugged Free Market Libertarian Laissez Faire concept, but in the Real World, the complete lack of government regulation leads to Anarchy and SHORT MISERABLE LIFESPANS for the greater majority of a society's population.

Sorry for this disjointed comment, and I doubt you'll internalize much of what I just said, but I do stand by my recommendation to volunteer at one of these places just to remind you of how the world works for the disadvantaged.

"Best of luck"

JGS



Yaeger

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Re: Regulations are a really big drag on US growth
« Reply #39 on: May 21, 2016, 09:54:40 AM »
Hi Yaeger, I've read a few of your posts in different threads and you are pretty good at engaging the MMM community as kind of a devil's advocate.

Don't take this the wrong way, but I think you might benefit in the long run from volunteering in a homeless shelter, perhaps a soup kitchen, perhaps a local children's hospital or even a local library.  You don't seem to grog the whole "what benefits society benefits myself" thing.

Whoa there, why do you assume that I haven't volunteered for charity? That I haven't helped the poor in 3rd world countries in poverty conditions appalling by western standards? In 2015 I was aboard a hospital ship that sailed around for 6 months and provided medical care to over 100,000 patients in isolated areas of South and Central America. If YOU want to see REAL poverty, go to some of those places and talk about how terrible the poor in the US have it. Heck, the poverty level in the US is higher than the median income through most of Europe.

Frankly, I find this attitude insulting and dismissive. The idea that if anyone is against giving money to the poor, they just 'doesn't understand' is the most absurd piece of garbage I've heard. But hey, if you think throwing more of (someone else's) money at poverty will do anything besides create more economic drag, you haven't been looking at history and the facts.
« Last Edit: May 21, 2016, 10:18:54 AM by Yaeger »

franklin w. dixon

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Re: Regulations are a really big drag on US growth
« Reply #40 on: May 21, 2016, 10:07:18 AM »
According to my big fat ass if Yaeger stopped posting garbage all over the site the economy would go up one billion. MOD NOTE: Being an Ass and personal attacks are not acceptable on the forum.
« Last Edit: May 24, 2016, 07:47:03 AM by swick »

Yaeger

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Re: Regulations are a really big drag on US growth
« Reply #41 on: May 21, 2016, 10:26:21 AM »
We can argue all day about the math and how much a part of that massive loss can be offset by intangible benefits. However, I think everyone here has agreed that there is a significant drag on the economy because of it. The premise stands. By all means, if you disagree, post a study that at the very least supports your opinion.

This has never been about the push to eliminate all regulations, as even I support *some* of those. However, it's my opinion that we do have excessive regulations stemming from growth in the 1970's through today that limit US economic growth, impact the poor (while helping them), and sabotage our long-term welfare.

EnjoyIt

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Re: Regulations are a really big drag on US growth
« Reply #42 on: May 21, 2016, 10:30:06 AM »

But I'm interested in hearing why it is you believe that too much regulation is the problem in the health sector.

As a worker in health care industry I see all the benefits and harm of regulation.  Certain regulations provide safety to patients such as the EMTALA act that makes an Emergency Department medically screen and evaluate all patients that request treatment regardless of their ability to pay.  Although this is fiscal drain on the hospital, its resources and its staff, it does benefit the poor.  This does come with some abuse of the law but I will not get into that here.

Another regulation that is a massive detriment to society is that the government cuts funding based on patient satisfaction.  The way it works is that the government makes the hospital hire a company to survey its patients.  All the surveys in the US are tallied and the hospitals in the top 10% get extra funding, next tier get no change in funding, and everyone else has their funding cut.  That means there will always be a percentage of hospitals with their funding cut.  Now lets add to it the reality of patient satisfaction.  Studies have shown that patient satisfaction does not equal better care.  It actually shows an increase in utilization of resources.  Patients tend to want more studies done thinking they are getting better care because of it.  More studies leads to more falls positive results which leads to increased risk from unnecessary procedures. Also, patients tend to be more satisfied when they are prescribed antibiotics and pain medication.  And the result is an increased over utilization of unnecessary antibiotic and narcotic use.  This regulation increases the cost to the hospital, cuts, reimbursement and leads to worse patient outcomes.

Another regulation that creates more harm than good is Meaningful Use that has came with Obama Care.  Part of Meaningful Use has demanded that all health care facilities do computer documentation.  In the first few years a carrot was placed so that early adopters get increased reimbursement.  Then a few years later any facility that is not electronic gets reimbursement cut.  What is the end result?  The benefit is that data is much easier find and understand,  This makes finding patient information much easier as well as reading and understanding what physicians and nurses have documented.  The harm was the expenditure the facilities had to lay out to buy the computers and the software including hiring new personnel to manage the IT infrastructure.  What is worse, computer entry of data takes a lot longer than a simple sheet of paper.  Nurses and doctors now spend more time sitting in front of the computer entering data than they do giving direct patient care.  This results in more burdens being placed on the staff who now can't handle the workload.  Years ago on the medical floors it was not uncommon for a nurse to handle 10 patients at a time.  Today that same nurse can only handle 5 and many institutions are decreasing it down to 4.  This increased cost leads to lower wages and understaffing of departments.  Interestingly enough I see every several months more regulation being added.  Our nurses need to document something additional in their chart every few months.  Although this addition may take only 30 extra seconds, if you add that 30 seconds a few times a day and these new documentation additions are added every few months you can see after a few short years you find yourself adding an extra hour of work with minimal benefit to the patient with no increase in compensation. This is the reason why many institutions are discussing going from a 5:1 ratio down to a 4:1 ratio on the medical floors.

Another example of regulation adds to cost.  If you go into any hospital, they have an entire department of people who are responsible for regulations and billing.  This adds millions to the cost of running the hospital.  This cost is paid by lower wages and understaffing.  Being on hospital committees You can see that the margin of profit can be as low as 1-3%.  By increasing regulations or cutting reimbursement by even 1% or 2% can be devastating to a hospital.

scottish

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Re: Regulations are a really big drag on US growth
« Reply #43 on: May 21, 2016, 11:15:26 AM »
Quote
Whoa there, why do you assume that I haven't volunteered for charity?

have you?

matchewed

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Re: Regulations are a really big drag on US growth
« Reply #44 on: May 21, 2016, 11:32:55 AM »
Christ people can you make this a little bit less about the person posting and more about their post.

EnjoyIt

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Re: Regulations are a really big drag on US growth
« Reply #45 on: May 21, 2016, 11:59:50 AM »
I think the point of this post is not to say that all regulation is bad.  The point is that all regulation has consequences.  Some beneficial and some not.  We need to accept the fact that increased regulation cost money and must come from somewhere.  Often times this cost is eventually offset on the backs of worker compensation and economic growth.  I am not saying that these regulation have or have not created a benefit to society.  All I am saying is that these regulations have an immediate and long term cost as well.  I fully agree with Yaeger that these costs are real and must be considered when evaluating their benefit.

MilesTeg

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Re: Regulations are a really big drag on US growth
« Reply #46 on: May 21, 2016, 12:05:42 PM »
We can argue all day about the math and how much a part of that massive loss can be offset by intangible benefits. However, I think everyone here has agreed that there is a significant drag on the economy because of it. The premise stands. By all means, if you disagree, post a study that at the very least supports your opinion.

This has never been about the push to eliminate all regulations, as even I support *some* of those. However, it's my opinion that we do have excessive regulations stemming from growth in the 1970's through today that limit US economic growth, impact the poor (while helping them), and sabotage our long-term welfare.

It's great you have an opinion, but you have provided exactly zero evidence for that opinion. We certainly all agree that regulation has a cost, but you have provided exactly zero support for your assertion that the costs outweigh the benefits and without that attempting to draw _any_ conclusion is ridiculous.

forummm

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Re: Regulations are a really big drag on US growth
« Reply #47 on: May 21, 2016, 12:08:31 PM »

But I'm interested in hearing why it is you believe that too much regulation is the problem in the health sector.

As a worker in health care industry I see all the benefits and harm of regulation.  Certain regulations provide safety to patients such as the EMTALA act that makes an Emergency Department medically screen and evaluate all patients that request treatment regardless of their ability to pay.  Although this is fiscal drain on the hospital, its resources and its staff, it does benefit the poor.  This does come with some abuse of the law but I will not get into that here.

Another regulation that is a massive detriment to society is that the government cuts funding based on patient satisfaction.  The way it works is that the government makes the hospital hire a company to survey its patients.  All the surveys in the US are tallied and the hospitals in the top 10% get extra funding, next tier get no change in funding, and everyone else has their funding cut.  That means there will always be a percentage of hospitals with their funding cut.  Now lets add to it the reality of patient satisfaction.  Studies have shown that patient satisfaction does not equal better care.  It actually shows an increase in utilization of resources.  Patients tend to want more studies done thinking they are getting better care because of it.  More studies leads to more falls positive results which leads to increased risk from unnecessary procedures. Also, patients tend to be more satisfied when they are prescribed antibiotics and pain medication.  And the result is an increased over utilization of unnecessary antibiotic and narcotic use.  This regulation increases the cost to the hospital, cuts, reimbursement and leads to worse patient outcomes.

Another regulation that creates more harm than good is Meaningful Use that has came with Obama Care.  Part of Meaningful Use has demanded that all health care facilities do computer documentation.  In the first few years a carrot was placed so that early adopters get increased reimbursement.  Then a few years later any facility that is not electronic gets reimbursement cut.  What is the end result?  The benefit is that data is much easier find and understand,  This makes finding patient information much easier as well as reading and understanding what physicians and nurses have documented.  The harm was the expenditure the facilities had to lay out to buy the computers and the software including hiring new personnel to manage the IT infrastructure.  What is worse, computer entry of data takes a lot longer than a simple sheet of paper.  Nurses and doctors now spend more time sitting in front of the computer entering data than they do giving direct patient care.  This results in more burdens being placed on the staff who now can't handle the workload.  Years ago on the medical floors it was not uncommon for a nurse to handle 10 patients at a time.  Today that same nurse can only handle 5 and many institutions are decreasing it down to 4.  This increased cost leads to lower wages and understaffing of departments.  Interestingly enough I see every several months more regulation being added.  Our nurses need to document something additional in their chart every few months.  Although this addition may take only 30 extra seconds, if you add that 30 seconds a few times a day and these new documentation additions are added every few months you can see after a few short years you find yourself adding an extra hour of work with minimal benefit to the patient with no increase in compensation. This is the reason why many institutions are discussing going from a 5:1 ratio down to a 4:1 ratio on the medical floors.

Another example of regulation adds to cost.  If you go into any hospital, they have an entire department of people who are responsible for regulations and billing.  This adds millions to the cost of running the hospital.  This cost is paid by lower wages and understaffing.  Being on hospital committees You can see that the margin of profit can be as low as 1-3%.  By increasing regulations or cutting reimbursement by even 1% or 2% can be devastating to a hospital.

Thanks for responding. I am interested in the examples. I agree that some of these examples make things complicated or are implemented poorly. But I also don't think these examples are that significantly contributing towards the longstanding failure of our healthcare system. I have some thoughts on them that may differ from yours.

The requirement for ERs to check people out and stabilize them regardless of their ability to pay has a very small impact on the overall healthcare system. And that impact is going away quickly because of the ACA (although more slowly in the states that refuse to expand Medicaid). Before the ACA, those hospitals tending to a higher amount of uncompensated care were given extra DSH funds from the federal government to offset their higher burden. The ACA removed those extra funds because they weren't supposed to be needed anymore because of the Medicaid expansion. Hospitals in non-expansion states continue to be screwed by their governor/legislature decision to not expand Medicaid so the hospitals can get paid for the treatment they provide. This is an example of partisan obstruction and not bad regulation.

Regarding patient satisfaction, the federal government doesn't just give hospitals money (other than grant programs or for specific payment for services). If you mean that hospitals get a bonus of up to 0.25% of the cost of care for Medicare patients, based on patient satisfaction, then yes. And I agree that it's a flawed metric. But it's only a 0.25% bonus right now that's based on patient satisfaction. And it's only on the Medicare portion of the hospital's patients. And I believe that metric will be changed in the future because it's not a great one. But I don't see this as being a huge problem either since it's maybe 0.1% of the hospital's revenue if you assume that 40% of patients are Medicare.

Meaningful Use is not part of the ACA at all. It was part of HITECH/ARRA. It is a program that failed in its intent to get providers to use electronic health record systems in a meaningful way. But succeeded in its intent to help subsidize providers to be able to start using EHR systems in the first place. I agree that it was very poorly handled. A big reason why is that there are so many EHR vendors and they wanted to leave things to the private sector. Which lets the EHR vendors charge whatever they want to. And the vendors haven't done a good job of designing great interfaces that facilitate quick and easy use of the system while also not altering the physician/patient dynamic. But it also has no bearing on why the health system is a mess. The health system was a mess well before MU was implemented a few years ago.

The billing issue is actually an example of too little regulation or government involvement. Because there are so many different insurance companies that have their different ways that they require to be billed, and they like to deny claims when they can get away with it, and the whole thing is so complicated, you need a lot of people in every provider's office just to do billing. If there were a single way to bill for services (such as if there was a single payer system or a required standard) then you could cut all of that duplication out of the system. By allowing the health system to be private, we have a tremendous amount of wasted overhead going on (hundreds of billions of dollars per year).

I think people underestimate how profitable hospitals are. And that situation has only improved post-ACA. Even the "nonprofit" hospitals rake in the bucks (most of the most profitable hospitals are nonprofits). Certainly there are some hospitals that struggle. But in general they do very well. HCA's stock has quadrupled the last 4 years. Since we have a competitive insurance industry and hospitals have a local monopoly or oligopoly (and frequently are owned by the same parent company as other local hospitals), they have pricing power and can dictate prices to insurers to a large degree. It's hard for an insurer to keep people on their plans if they can't go to certain hospitals in-network, so they generally cave significantly towards whatever rates the hospital asks for. This varies some by geography and the specifics of the local market. But in most places there isn't much local competition so they have a lot of pricing power.

http://www.usnews.com/news/articles/2016-05-02/study-nonprofit-hospitals-generate-the-most-profit

I think the point of this post is not to say that all regulation is bad.  The point is that all regulation has consequences.  Some beneficial and some not.  We need to accept the fact that increased regulation cost money and must come from somewhere.  Often times this cost is eventually offset on the backs of worker compensation and economic growth.  I am not saying that these regulation have or have not created a benefit to society.  All I am saying is that these regulations have an immediate and long term cost as well.  I fully agree with Yaeger that these costs are real and must be considered when evaluating their benefit.

For the last 35 years, regulation is subject to a cost benefit analysis before it can be implemented.

matchewed

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Re: Regulations are a really big drag on US growth
« Reply #48 on: May 21, 2016, 12:13:01 PM »
I think it's just an oversimplification personally. Regulations may drag US growth but they also protect people. Lack of regulations or clear removal of them has also caused economic damage in the past *cough*  2008 *cough*.

So while the basic statement may be true it is relatively meaningless without the greater context of the purpose of regulation and other "consequences" of regulation.

EnjoyIt

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Re: Regulations are a really big drag on US growth
« Reply #49 on: May 21, 2016, 12:26:15 PM »
forummm, 
Thanks for responding and clarifying the source of Meaningful Use.  I was not aware it came before ACA, but it does make more sense on timing.

Anyways, you are missing the point.  All those regulations cost the hospital money to enforce and run.  Do you think managing an IT department or collecting patient satisfaction surveys has no cost?  What about all those classes staff has to take to learn how to acquire better scores. Don't forget hiring the company to collect those surveys.  All this has a cost that must come from somewhere. Usually this comes from the backs of the employees who get paid less and overworked.

As for the comment regarding non profit hospitals make the most.  Yes, there are many non profit hospitals that profit immensly.  There are even more non profit hospitals that run on a profit margin of 1-3%. Those hospitals budgets are very tight.  Just look around at how many hospitals required closing down or partnering with bigger mega corps to stay afloat.  This is what regulation has done to them.

I will not go into if regulation has increased patient care or patient safety.  All I will say is those regulations cost money.  That money comes from higher medical care costs, lower wages, and overworked staff.

Every few months more regulations keep coming. Documentation keeps on increasing, this cost is real and ever increasing.
« Last Edit: May 21, 2016, 12:27:51 PM by EnjoyIt »

 

Wow, a phone plan for fifteen bucks!