Why are so many breweries opening in Duluth and elsewhere in Minnesota? See "Canoe give me a Bent Paddle". Alcohol production and sale is very highly regulated. Why are so many other small businesses opening, if they don't compete with giant corporations? See "Big corporations hinder little corporations".
This blog entry was inspired by an interview with Niall Ferguson about his book "The Great Degeneration". The interview was by Lauren Lyster "The Daily Ticker" and entitled "The 1.8 Trillion Tax You've Never Heard Of". This huge tax is the supposed cost of all the government regulations. Among other indicators for increased regulations is the increased number of pages in the Federal Regulations.
The premise is if we only cut back on regulations then we'll free up businesses to be more productive. What Ferguson doesn't say is less regulation pushes costs off on everybody else. Yep, if businesses were free to pollute they would be more productive and their prices would go down (or would it be the CEOs salary would go way up). But if they were free to pollute what would our costs be in health? If they were free of regulations in construction then rents would be less (or CEO salary…). But if they were free of construction regulations how many of us would die when their buildings collapsed or caught fire? Triangle Shirtwaist Factory anyone? Bangladesh garment factory? Salvation Army building collapse?
Regulations have increased not because government is eager to have more control. Regulations have increased because we live in an ever increasingly complex and compact society. Regulations increase because we understand more about the harmful effects of many activities and substances on ourselves. Lead in gasoline was seen as beneficial because it reduced engine knock. But then lead was seen as harmful to growing brains. Factories could dump whatever pollutants into nearby streams and lakes, but then people realized that the pollution was killing fish and costing cities more to clean up the water for drinking.
A counter to Niall Ferguson's position can be found at "Niall Ferguson Cites Flawed Evidence to Stoke Regulation Fears", Albert Kleine, Media Matters for America.
This article cites an Office of Management and Budget report of the costs and benefits. Two of my selections from this report follow.
"The estimated annual benefits of major Federal regulations reviewed by OMB from October 1, 2001, to September 30, 2011, for which agencies estimated and monetized both benefits and costs, are in the aggregate between $141 billion and $691 billion, while the estimated annual costs are in the aggregate between $42.4 billion and $66.3 billion. These ranges are reported in 2001 dollars and reflect uncertainty in the benefits and costs of each rule at the time that it was evaluated."
"It is important to emphasize that the large estimated benefits of EPA rules are mostly attributable to the reduction in public exposure to a single air pollutant: fine particulate matter. Of the EPA’s 19 air rules, the rule with the highest estimated benefit is the Clean Air Fine Particle Implementation Rule, issued in 2007, with benefits ranging from $19 billion to $167 billion per year. While the benefits of this rule far exceed the costs, the cost estimate for the 2007 Clean Air Fine Particle Implementation Rule is also the highest at $7.3 billion per year. In addition, the Cross-State Air Pollution Rule (CAIR Replacement Rule (2060-AP50)) has benefits ranging from $20.5 to $59.7 billion and costs of approximately $0.7 billion."
- 2012 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State, Local and Tribal Entities
