Regulations

Listening to certain sectors of our society, you might come to the conclusion that regulations are bad. Regulations as a concept. All regulations. There is a school of thought that regulations are by definition government overreach and without them businesses would be free to grow the economy by investment and job creation. But exactly what are government regulations? The intent of regulations is to carry out legislation enacted by Congress. Sometimes the law is very specific. In that case regulations serve to give direction to the agencies tasked with executing and implementing the law. They detail the process and procedures that they will follow to carry out the law. Other times the law is vague in some aspects and the regulations will fill in the details, define terms, as well as setting up the procedures for execution. There are also regulations that are written in order to carry out the broad mission of an agency or department. For example the Occupational Safety and Health Administration (OSHA) is responsible for ensuring safe and healthy workplaces in the United States. Many of the OSHA regulations cannot be traced back to a specific law, like the regulation that pallets must be stored flat on the floor rather than leaning against a wall - this falls under the broad umbrella of keeping the workplaces safe. Local Health Departments are another example. They have broad authority to promulgate regulations that will ensure food safety. In my own job at the Nebraska Department of Revenue, the law might be that there will be a 5.5% sales tax on all sales transactions, but only several named service transactions. It is then up to the department to come up with regulations defining precisely what constitutes a sale, what constitute a transaction, etc.

Do regulations cost businesses money? Do they inhibit economic growth? Do they prevent job creation?

Regulations can cost a company money. If there is an environmental regulation that prevents a company from dumping their trash in the local river, the cost of finding an alternative destination for their trash is going to cost money and eat into the bottom line. If businesses are required to be handicap accessible, then the cost of ramps, bathroom sinks, etc is going to cost money. But I dispute whether they actually inhibit economic growth. I have never met, or even heard of a businessman, who when confronted with some extra costs, just said "screw it" and accepted the lower profits. Most businesses figure out some way to get that bottom line fat and healthy again.

This brings up job creation. But let's dispense with the myth that business operators create jobs out of some altruistic impulse to give their fellow man a hand. Jobs are created because the business owner needs bodies to carry out some of the functions of their business, i.e. there is more work than he can do himself. If the work of the business can be done by fewer bodies, either by automation or increased efficiency or both, then jobs get destroyed. When I toiled in the retail world there was a tight focus on the amount of money spent on labor. It had to be a certain percentage of sales, so if the sales went down, the amount of people who got to work decreased as well (it wasn't quite that simple, but it describes the situation in broad strokes). The idea that some cash getting freed up due to a reduction in regulations is going to create some jobs is wishful thinking...or outright deception. Even without "costly" regulation being factored in, business owners are constantly looking for ways to reduce their labor costs...self-checkouts at Wal-Mart anyone?

None of this means that some regulations shouldn't be eliminated. The promulgation of regulations is not a quick process, it involves input from all stakeholders as well as public hearings in addition to studies on the impact - environmental, economic etc. Eliminating a regulation should be a thoughtful, detailed process as well. They shouldn't be eliminated just because an influential business objects to it, or someone has an ideological problem with it.

By why the assumption that regulations are bad just because they're regulations? We have regulations against child labor. We have regulations against polluting our natural resources. We recently added a regulation requiring financial consultants to act in the best interest of their clients (and why is that controversial?) We have regulations preventing the banks from crashing our economy...again. They're assumed to be bad because some business leaders and lobbyists for industry are looking for ways to increase their profits. And it's long been the standard that a business operator's main (if not only) responsibility is to provide profits for the investors and stockholders. This goes back to Henry Ford, who was willing to forgo short-term profits by paying his employees more. He saw that this would reduce turnover and give them the means to buy his cars! Some of his stockholders sued and won, insisting that his actions were costing them money. A business owner has no financial reason to care about the environment, his employees or the larger economy. Of course, some do care, but it's only the law and regulations which compel them to refrain from acting in ways that are harmful to the environment, employees or the greater economy. Unregulated banks and home loan companies caused the economy to crash; unregulated manufacturers in the early decades of the 20th century polluted the air and our rivers; unregulated employers abused their employees. And there was no legal recourse until their were laws and regulations preventing these abuses.

Our current administration has made eliminating regulations a big part of its agenda. Men and women have been nominated and confirmed as the heads of agencies and departments that they have sued in the past, people who oppose the mission of the departments that they head. Cabinet officials and advisors who have a financial interest in eliminating regulations in order to line their own pockets  are making the decisions. The decision process is in the hands of people who will personally profit from these actions.

Evaluate regulations? Yes. But let's slow down and get the foxes out of the henhouse.