Saturday, September 3, 2011

Obama joins the anti-government crowd

Fewer regulations are a good thing, apparently, as Obama agrees with the complaints of business and pulls back EPA regulations described as "life-saving." It's common for business to complain about regulations, but I wonder how many businesses were unable to grow because of the regulations on ozone. I'm pretty skeptical that this was a binding constraint on economic growth, but I admit I'm far from knowledgeable about business. (The Washington Post article gives more details about alleged impacts, and they do sound reasonable.) The New York Times today weighs in, arguing that the complaints of business have been frequently based on little or no evidence and proclaiming the act a political one designed to help out Obama in the election. These days, every politician's acts seem to fit into that category, so it's hard to argue that point.

Update: NYT columnist Paul Krugman adds that in this economic climate, forcing companies to spend (on pollution reduction equipment, in this case) is exactly what's needed. He claims that the reason the economy is stalled is that businesses just aren't spending, and so they don't need to hire, etc., etc., and so prompting them to spend could be key to getting things moving again. Another New York Times article paints a broader picture, claiming that 1) companies blame losses on regulations even when broader issues like the economy are actually to blame. 2) Company estimates have turned out to be much inflated in the past: a Resources for the Future economist pointed out that the Clean Air Act was predicted to cost as much as $7.5 billion for implementation, when in fact it turned out to be $1 billion. 3) Michael Greenstone, an environmental economist I've actually spent a bit of time with, argues that the same act has cost 600,000 jobs but has also led to a number of health and environmental benefits which should also be on the balance sheet. However, 4) current regulations are complicated and often confusing: one firm is claiming that they couldn't undertake a project because they couldn't figure out which of three regulations applied to it. The article concludes with a call to recognize that regulations need to be carefully analyzed, though they rarely are. Nice.

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