Obama and Regulatory Uncertainty
One of the current Republican talking point is that a major reason that firms are not hiring is regulatory uncertainty.
Of course there is little or no evidence to support this argument and virtually every poll of business and especially small business shows that fear of regulation is a very minor factor in current business decisions. The dominant factor in poll after poll is inadequate demand.
ON 11 June 2004 Milton Friedman published an interesting article in the Wall Street Journal Editorial Page called “Freedom’s Friend” [reprint available here], where he proposed that the number of pages in the Federal Register could be used as a measure of government’s interference in people lives and a measure of freedom.
I’ve looked at this measure before, back in 2008. Given this new Republican talking point it seems a good time to revisit it, so I’ve updated the data to include the first two years of the Obama administration. The chart compares the average number of pages published in the Federal Register each year. This measure allows you to compare the number of pages in four-year and eight-year administrations, as well as the number in the first two years of the Obama administration. If you tried to chart the total number of pages published over an administration, you could not make this type of comparison very well.
Milton Friedman wanted to use this approach to demonstrate that Reagan interfered in people freedom less than other presidents. He clearly made that point, and if you update the chart it shows that Bush II set the all time record for the number of pages in the Federal Register. Of course, the Republicans would deny that the record level of interference in people’s freedom by President Bush caused business to limit hiring.
But in the first two years of the Obama administration the number of pages in the Federal Register averaged 75,875 as compared to and average of 75,894 under Bush. So far Obama appears to have published -0.02% fewer regulations than Bush. Of course, he still has time to move ahead of Bush. But as of yet this measure implies that there is actually less regulatory uncertainty under Obama than there was under Bush when the Republicans obviously made no claims about regulatory uncertainty restraining employment.
I wonder if anyone in the press would pick up this point and actually question some Republican when they make this talking point.
I clearly miss [the late] Mark Haines of CNBC, who would regularly call politicians or other fools on such talking points. This would clearly give someone else at CNBC the chance to pick up where Mark Haines left off.
At least, I hope some other popular bloggers will spread this analysis.
All of the Healthcare bills, Dodd-Frank, EPA and other regulatory burdens are included in the data I posted.
The Healthcare biil was passed inMarch 2010 and Dodd-Frank in July 2010, so they had ample time to get many of the new regulations into the Federal Register. Yes, they are not through but that is largely because of Republicanovstruction.
Your quote from Senator Wicker is a prime example of the type of know nothing talking points I’m talking about. All new regulations are required by law to have a cost-benefit analysis before they are posted and that analysis includes the impact on jobs and the economy. The EPA always takes into consideration the economic impact of every regulation. Now maybe if you think clean air and clean water have no economic value Wicker’s claims might be valid. But since that is incorrect his claim is completely wrong.
if regulatory uncertainty were the problem, investment in software & equipement would also be down…
So your position is that business welcomes more EPA regulation and oversight because it is easier for them to make profit?
Based on some recent travels and conversations OSHA has been turned loose on small non-union contractors, especially in disaster areas. (We will have to wait on the 2011 stat reports to confirm a trend).
And the DOL is apparently upping wage audits aimed at large housing companies. They are attacking in Michigan as we speak.
Who needs new regs? Just hammer companies with the old ones!
When you’re a Hammer everything looks like a Nail?
If Dodd Frank implements anythiong like the accouint reg for the military industry complex, there will be tons of paper filled with accounting fraud, just like today on wall st.
The only area with worse audit results than the pentagon is the financial sector.
I doubt Dodd Frank will put a dent in accounting fraud.
Is it your position that regulations currently in place should not be enforced? There’s a great deal of uncertainty involved in a society that capriciously decides when to enforce regulations (and laws) and when not to (and upon whom) based on extra legal considerations. The more powerless one is, the greater the effect, since one has absolutely no control over these decisions. That applies to truly small businesses as well as individuals.
I’m happy to see labor laws being enforced. Small businesses, especially, can pretty much do what they want with their employees in these times, since those employees don’t dare to speak out and it’s been unlikely that anyone outside the company is watching.
As for disaster areas/urgent needs/etc., exceptions, if deemed acceptable, should be across the board and public. Otherwise, rules, regulations, and laws should be enforced – or at the least enforceable.
Darren, I suggest you read this:http://www.thefiscaltimes.com/Columns/2011/09/09/Is-Government-Regulation-Stalling-Job-Growth.aspx#page1
Companies hire what they need to hire. However, it is the INVESTMENT that is affected by regulatory uncertainty. While entreprenuers are willing to go out and conquer the world, by say, building a new hospital or health clinic, the people that would back the venture with cash need more certainty. That’s where the uncertainty affects employment – it’s not growing.
Without unions the government must do more to enforce labor laws, there are many thugs in the business world and no counter weight to them if the government does not regulate. Labor, consumers and environment need the regulations to have some protection.
Business plays hardball, regulations are necessary.
The entrepreneurs are not willing to go and conquer the world unless the tax payers underwrite any risks or possible losses. They have lobbyists to make sure of that. That is the certainty they want. Government provides taax cuts to pay part of the wages, no hire without that.
The fact Friedman thinks something as arbitrary as the number of pages in the Federal Register could be at all helpful highlights:
a) The extent to which weird mathematical OCD drove his economics.
b) The fact that he was a bad economist. Yes I went there.
There is no correlation between the amount of space a rule takes up and the degree to which it interferes with people’s lives. Defining property rights is probably the most complicated aspect of the law, so by Friedman’s logic we should get rid of that first, no?
You know, if the argument relies on careful choice of perjoratives, it may not be much of an argument. “Turned loose”, “hammer” and “attack” all sound pretty scary, but boil down to assuring compliance. My old daddy, who started a good many firms in his day, often made the point that unless everybody complies with the rules, honest people will quickly be put out of business. Seems to me Rusty is arguing for special treatment for dishonest people.
Sammy, all you have done is restate the very same nonsense position that spencer was showing to be nonsense. You haven’t actually defended a position, you’ve just ignored evidence against the position and restated it. That’s not gonna work on any but the weak-minded.