Job-killing regulations? Opponents fail to support claims with evidence

Original Reporting | ByJames Lardner | Regulation

they sort of picked the low-hanging fruit, and the incremental cost of achieving significant environmental gains was pretty low. The concern is that as you go on and successfully tighten environmental regulations, the incremental cost rises rapidly…”

Norman acknowledged that he could not cite a past example of large, regulation-linked job losses. “You’d have to ask an environmental specialist about that,” he said. Norman pointed out that his own study had not involved original research, relying instead on raw data from a separate research project — an analysis, by NERA Economic Consulting (a global economic consulting firm) of the economic impact of greenhouse gas regulation on 11 states.

Norman, who said that it should be beyond argument that environmental regulation both creates some jobs and eliminates others, said that his and NERA’s work had sought to account for both. He went on to say, however, that the question of net gain or loss is inextricably tied to differing assumptions about the benefit-cost ratio of activities undertaken for the sake of regulatory compliance versus the benefit-cost ratio of other business activity.

ConesvilleOHArticlePhoto.jpg
Coal-fired power plant in Conesville, Ohio. For the time being, EPA limits on greenhouse-gas emissions will apply only to new facilities or plants undergoing major modification. Industry concerns center on the problem of modifying older plants like this one. Rules for such plants will probably not go into force until 2015 or 2016, the EPA says.

If estimates from the EPA or environmentalists properly capture the job-catalyzing impact of regulation, he said, then regulation would indeed have striking net benefits. But, like many others critical of regulation, Norman believes that the EPA and its allies exaggerate the job-creating impact of regulation, and that economic activity uninfluenced by regulation can be presumed to be more productive. Indeed, in an analogy employed by Norman to illustrate this point, the regulation-linked activity had no value at all: “I can throw a brick into a window and create jobs for a window company,” Norman said, “but the person spending the money for a new window now has less to spend on other goods and services and that means jobs will be lost elsewhere.”

 

An alternative Republican view

Why, despite the absence of supporting evidence, do so many people believe that regulation will have catastrophic economic results? Rep. Carter acknowledged that he got his data on the cement industry from the industry. That’s fairly common, says former Congressman Sherwood Boehlert, a Republican who served on the House Science Committee (now known as the Science, Space and Technology Committee) from 1981 to 2006, and was its chairman for the last five of those years. “No business wants any regulation — it’s inconvenient.”

Another difficulty, Boehlert says, is that modern legislators don’t always have the time or the desire to listen to opinions that diverge from the ones they already hold. “Most members of Congress are like one-armed paper-hangers — they’ve got 58 things to do every day,” he says. “So it’s easy to go online and read some commentary or get a snippet from a radio talk show, and you tend to believe what you hear.”

It’s been a source of frustration to Boehlert that many of his former colleagues don’t grasp the potential economic benefits of regulation.

Some of the countries with the strongest, strictest environmental regulations have had some of the best economic growth,” Boehlert says.

We’re importing a lot of pollution-control products from other nations. Why aren’t we creating them and exporting them to other nations? And look what happened to the auto industry. Month-after-month, and year-after-year, the percentage of international automobile sales for GM, Chrysler and Ford were going down, and Toyota, Hyundai and Honda were going up. What was the difference? Both were selling style. But where Detroit was selling power, these others were selling economy and fuel efficiency.”

The U.S. companies, he says, “fought every step of the way, and they had to get a bailout…They’re coming back now, and you know what they’re doing? They’re making more fuel-efficient vehicles. One reason is because they’re required to.”

 

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