Why are we giving fat cats a free lunch?
“One man’s meat is another man’s poison.” Lucretius
Some call bureaucratic regulations “job killers” that stifle economic growth
Others call them protections that safeguard human health and the environment.
Whatever they are, they are an endangered species, as the Trump administration rolls back Obama-era regulations at a record-breaking pace. Because these decisions are made unilaterally and quietly, they have attracted little attention from Congress or the press.
It is now conventional wisdom that the American economy has become shackled with unnecessary regulations, despite its record of steady if unspectacular growth since the 2008 crash, which was a good example of unregulated greed.
There are plenty of burdensome regulations that could and should be streamlined or eliminated. But do regulations, particularly environmental regulations, always stifle economic growth?
The answer to that question is a resounding no, according to a very unlikely source: the White House’s Office of Management and Budget.
In a little noted study released last week, which was reported by Vox and sent to me by a friend, the OMB found that the aggregate costs to industry of implementing major federal regulations between 2006 and 2016 ranged from $59 to $88 billion, which is a lot of money. However, the aggregate and calculable economic benefits from those regulations – cleaner air and water, better worker safety, and improved public heath, for example – ranged from $219 billion to $695 billion, which is considerably more money. “Those regulations had benefits far in excess of their costs,” wrote Vox’s David Roberts, “and they had no discernible effect on jobs or economic growth.”
To be sure, the costs are paid by private and corporate entities, whereas the benefits accrue to the public, that is to say, to all of us; and while deregulation would enable industry to save those costs, the cost to the public and the overall economy would be huge. Roberts argues that the reason behind the clandestine regulatory changes is the Republican Party’s insistence on transferring wealth to the already very rich. And he sees it everywhere. This “upward redistribution,” he writes, “is what unites GOP health care policy, tax policy, financial sector policy, and environmental policy.” And considering the accumulation of wealth by an ever-dwindling percentage of Americans, he would seem to have a point.
But I think there is a simpler explanation: from the earliest days of European settlement, we have treated our air, our waters, and all our natural resources as private property waiting to be appropriated for private use. It is the same philosophy that underpins the current assault on national parks and monuments and on the fees ranchers pay to graze their cattle on federal lands. It’s why we allow coal companies to rip off the tops of mountains, to hurl the swag into rivers, foul the air, and impair the health of mining communities, while the rest of us taxpayers pick up the tab. This is the real “tragedy of the commons.” It has produced unprecedented growth but also enormous destruction, great wealth but much poverty.
One purpose of regulations is to ensure that a business pays its full costs of production. Far from being anti-capitalist, that’s the foundation of the free-enterprise system. If the benefits of a regulation exceed its costs by as much as a factor of 7, it’s not a job killer, it’s a job creator. Rolling it back seems like a free lunch for fat cats.