The other questions that must be asked are what need/problem/concern is being
addressed by the regulations and what is the cost of not having these
regulations? If businesses behaved properly, they would not need oversight.
I love business. I love profit. Both are great things. They are the engine
for this country.But, I also love fairness and treating others with
respect.Businesses maximize profit. Not always at the expense of
ethical behavior, but it is not uncommon.We see this daily on the front
page of newspapers. And years later, they plead guilty and the corporation pays
a hefty fine.Who gets hurt when huge fines are levied? Mostly the
stockholder. Those who "perpetrated" the dastardly deed have typically
no consequences.Here is my idea to reduce regulations and unlawful
corporate behavior.Any time there is an INTENTIONAL corporate
misdeed of magnitude, someone goes to jail. Who? The highest level employee
who knew of the wrongdoing and said nothing. Want to cover your
rear? Just tell you boss. Shifting the penalty to the PERSON
rather than the stockholder will make PEOPLE much more accountable for their
actions.Think that corporations are people? Fine. Treat them like
people.Stop letting PEOPLE do illegal things and then hide behind
the protections of the corporation.
Those are all good points and certainly we should be vigilant in understanding
not only the cost of regulations but to what extent they are needed and whether
or not they are still useful (or have become obsolete as the economy and
technology changes). But we need to be equally aware of the benefits
of well-designed regulations, and those are typically much harder to quantify.
No economic system is perfect and some are terrible (i.e., communism) and
unregulated capitalism (which creates externalities, business cycles, adverse
selection, etc…) is no exception. There’s a strong
argument to be made that while government played a role in the meltdown of 2008
(by promoting home ownership in ways that did not make economic sense), the push
for widespread deregulation which began in the 80’s and gathered steam in
the 90’s, played a central role. Proper rules-of-the-road are
necessary for our economy to flourish, and we should be careful not to forget
the lessons of the past or we’re bound to repeat them.
The cost of regulation is high. The cost of insufficient regulation is much
higher. Look what happens when banks get happy about giving mortgages to people
with no hope to pay.
Look, instead of coming out against 'regulations', why not point to
specific regulations that aren't working? I could think of some, and
I'm a Democrat.
Eric Samuelsen,It is laudable to think that identifying and tackling
specific regulations is the answer to this problem. Unfortunately, the size of
the regulatory behemoth (60,000 pages?!) defies any one person or even motivated
group to figure out what is working and what is not. And what works in the eyes
of some doesn't work in the eyes of others. Judging from the comments
above, there will never be agreement about what the scope and nature of
government oversight should be.I continue to be one who believes
that the enormous and unchecked size of the federal bureaucracy is the single
most pernicious threat to the vitality of our nation's economy. Others
obviously disagree, including those who supported federalizing a large
percentage of the economy during President Obama's tenure.
Tyler D and Eric Samuelson,Well said. We live in a complex
economy.Certainly we should constantly review regulation to toss
what is not working. How many of those regulations affect just food and drugs.
I don't think most of us want those to be unregulated (or even very lightly
regulated).As to banking and other financial regulations? We do not
need to look far for examples of why they are critical to the stability of our
economy.Again, this is not to say everything we've got is good
or necessary. A strong concept of review and toss is important.But
it is also important we aren't tossing the baby with the bathwater.Look at the several problems in China over the past few years (poisonous
additives in milk, shoddy school construction in earthquake zones, etc. etc.).
We have a similar past. The regulations we have are our collective response to
those problems and are, effectively, our written version of "lessons
learned".We need to be careful that we do not put ourselves in
line for another costly (and potentially deadly) round of "education".
@Twin LightThanks… and your last two sentences were
outstanding!@azreader1 – “the size of the regulatory
behemoth (60,000 pages?!) defies any one person or even motivated group to
figure out what is working and what is not.”Couple things
– first, 60,000 pages tells us nothing. Who’s to say, given the size
and complexity of our economy, that the optimal number is 10,000 or 100,000 or a
million? No doubt we could do a better job at getting closer to the optimal
number. I would be all for either sunset provisions or perhaps an auditing
agency (which could easily be funded by its positive impact on the economy)
who’s sole purpose would be to perform cost/benefit analysis and provide
reports to congress. “Others obviously disagree, including
those who supported federalizing a large percentage of the economy during
President Obama's tenure.”Perhaps, but let’s be
careful to not paint with such a broad brush. Plenty of conservatives (at least
those who haven’t bought into the cartoon caricature worlds found in an
Ayn Rand novel) understand that unregulated capitalism would be incredibly
destructive in a whole host of ways.
Well, the one thing we do know is the cost of deregulation was about 450 billion
in TARP funds to get the banks back on their feet. Had AIG or GM gone upside
down, the conservative numbers between 1 and 3 trillion. And we haven't
even weighed in the cost of the hit the economy took over the last 5 years.
So you can play the numbers a lot of different ways. We have an
idea of what regulation cost... and we pretty much have an idea of what
deregulation cost. Finding the magic balance is the trillion dollar quest.
Not to be a "downer" BUT - what most of the posters here arent making
any reference to is the massive amounts of money (bankers especially, have
almost unlimited funds)special interests pay into both political parties with
the hope of avoiding any scrutiny whatsoever.The Supreme court has
let corporations know that the possibilities are endless.Find me
someone NOT beholden to any special interest group besides consumers and
I'll vote for him/her!
The DesNews published this same piece online under a different title, but has
since removed it. Unfortunately, some cogent comments there have been lost.The column fails to consider the costs of the problems that regulations
are trying to fix. Sure, air pollution controls are expensive and maybe even
"burdensome," but so are medical bills from emphysema and funeral costs.
An insulation installer advertised that "you pay for insulation whether you
have it or not." Same applies to regulation. A certain amount of
regulation is necessary. No human endeavor runs perfectly without oversight.
Mitt Romney acknowledged as much in the second presidential debate. The only
question is how much is excessive. It seems that many conservative commentators
tend to dismiss this distinction and lump all regulation together an economic
drain.If you are not fond of regulation, the policy alternative is
to rely on the tort system. This may work where there is a direct link between
a cause and a harm, like sickness from E. coli tainted produce, but is more
problematic if there is a less direct relationship (illness from air pollution
from multiple sources). Ultimately, it just shifts costs from the executive
branch to the judicial.
The thing I love the best is while the rest of America is still staggering out
of recession, Corporate America is doing just fine. Today, the stock market
stall just a whisper away from its all time high - more doubling investors money
in the shortest time ever on record. Corporate America is doing just fine.
Its people that are still struggling. And all the neocons are
concerned with is not employment, but allowing corporations to do yet even more,
unregulated, unwatched, and unaccountable for their actions. They care more for
corporate profits than they do getting practitioners of bad medicine out of the
hospital, as witnessed by their myopic view that all we need to do to fix
medical cost is tort reform - not the actual cost of delivering medical care.Its a one size fits all answer - less government, less oversight, less
protection for average people. I am not a wild eyed liberal - I am actually
rather fiscally conservative. But the carte blanche that is being offered here
reminds us of why we have child labor laws, OSHA, and the EPA sprang into
existence. If corporations could self regulate, we wouldn't
need them. But as we have seen....
Sanders fails to provide an objective standard to determine when regulation
becomes burdensome. Here's the economic theory he omitted. I'll use
a pollution example, but the concepts apply generally.Activities are
regulated when they impose social costs not borne by the user.Pollution cleanup (regulation) is said to have decreasing marginal benefits.
You gain a lot from the first percent of pollution cleanup, but the difference
in benefit between 98% and 99% clean may not be much. Pollution cleanup has
increasing marginal costs. It's easy and cheap to clean up the first 50%
of pollution, the low hanging fruit, but it can be very expensive to get that
last bit. If you graph the benefits of pollution control versus level of
cleanup, it will be steep at first and level off. If you graph the costs, it
will start shallow and get steeper. A graph of the the marginal costs and
benefits (the derivative, for you calculus fans) will resemble an
"X".The theoretical ideal is the level of cleanup where
MC=MB. Any less, you're getting shortchanged, more you're paying too
much. A regulation is burdensome if it is above the MC=MB intersection point.