GOVERNMENT CAN NOT WORK WITH INDUSTRY TO CRAFT REGULATION BECAUSE INDUSTRY HAS NO CREDIBILITY

GOVERNMENT CAN NOT WORK WITH INDUSTRY TO CRAFT REGULATION BECAUSE INDUSTRY HAS NO CREDIBILITY

Matt HealeyTuesday,12 March 2013

The Snap:

One of the common talking points on the cause of slower growth for the US economy has been over-regulation. The thought is that new regulations like Doad-Frank and the Affordable Care Act are not accomplishing what they were intended to and they put unreasonable restrictions on businesses.

The Download:

Generally government regulations do tend to hurt growth. This is not in dispute. The question is do the regulations provide benefits that are greater then the cost of lower growth? Enacting environmental regulations cost manufacturers growth and likely did cause slower job growth. It also cleaned up the Ohio river so that it would not catch on fire again. Yes, the river was so polluted that it burned. For my money, slower growth in exchange for non-flammable rivers is a good trade. Slower growth so the air quality in US cities is better than in Beijing is a good trade.

But how should governments write the regulations so they are as effective as possible without wasting resources on regulations that are ineffective? In an ideal world, the government agencies would work with industry, consumer advocates, scientists, trade groups, etc. to come up with the regulations. The problem is that many of these organizations have lost credibility with the public. Business lost credibility by advocating for positions that are not based in fact. For example, the energy lobby has spent considerable money denying climate change and the connection to the burning of fossils fuels. The beverage industry denies that soda contributes to obesity. Going back in history, the tobacco industry argued that smoking did not cause cancer. Given this climate of objection to any form of regulation and oversight, why would government try to work with business on crafting regulation? You cannot work with a group that is determined to oppose anything. So when business talks about how the governments will not work with them in developing regulations, perhaps they should look in the mirror to find to source of the problem.

Hat Tips:

Ohio River Burns,China Air Quality, Energy Lobby Denies Climate Change, Soda and obesity, Image Credit: Wikimedia Commons

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