Thread: "Job-killing regulations" = mindless talking point not based in reality.

Here is a great piece written by Bruce Bartlett who held senior policy roles in the Reagan and George H.W. Bush administrations. He debunks the current Republican talking points about how regulations are supposedly choking American business. Enjoy;

Republicans have a problem. People are increasingly concerned about unemployment, but Republicans have nothing to offer them. The G.O.P. opposes additional government spending for jobs programs and, in fact, favors big cuts in spending that would be likely to lead to further layoffs at all levels of government.

Republicans favor tax cuts for the wealthy and corporations, but these had no stimulative effect during the George W. Bush administration and there is no reason to believe that more of them will have any today. And the Republicans’ oft-stated concern for the deficit makes tax cuts a hard sell.

These constraints have led Republicans to embrace the idea that government regulation is the principal factor holding back employment. They assert that Barack Obama has unleashed a tidal wave of new regulations, which has created uncertainty among businesses and prevents them from investing and hiring.

No hard evidence is offered for this claim; it is simply asserted as self-evident and repeated endlessly throughout the conservative echo chamber.

On Aug. 29, the House majority leader, Eric Cantor of Virginia, sent a memorandum to members of the House Republican Conference, telling them to make the repeal of job-destroying regulations the key point in the Republican jobs agenda.

“By pursuing a steady repeal of job-destroying regulations, we can help lift the cloud of uncertainty hanging over small and large employers alike, empowering them to hire more workers,” Mr. Cantor said.

Evidence supporting Mr. Cantor’s contention that deregulation would increase unemployment is very weak. For some years, the Bureau of Labor Statistics has had a program that tracks mass layoffs. In 2007, the program was expanded, and businesses were asked their reasons for laying off workers. Among the reasons offered was “government regulations/intervention.” There is only partial data for 2007, but we have data since then through the second quarter of this year.

The table below presents the bureau’s data. As one can see, the number of layoffs nationwide caused by government regulation is minuscule and shows no evidence of getting worse during the Obama administration. Lack of demand for business products and services is vastly more important.



These results are supported by surveys. During June and July, Small Business Majority asked 1,257 small-business owners to name the two biggest problems they face. Only 13 percent listed government regulation as one of them. Almost half said their biggest problem was uncertainty about the future course of the economy — another way of saying a lack of customers and sales.

The Wall Street Journal’s July survey of business economists found, “The main reason U.S. companies are reluctant to step up hiring is scant demand, rather than uncertainty over government policies, according to a majority of economists.”

In August, McClatchy Newspapers canvassed small businesses, asking them if regulation was a big problem. It could find no evidence that this was the case.

“None of the business owners complained about regulation in their particular industries, and most seemed to welcome it,” McClatchy reported. “Some pointed to the lack of regulation in mortgage lending as a principal cause of the financial crisis that brought about the Great Recession of 2007-9 and its grim aftermath.”

The latest monthly survey of its members by the National Federation of Independent Business shows that poor sales are far and away their biggest problem. While concerns about regulation have risen during the Obama administration, they are about the same now as they were during Ronald Reagan’s administration, according to an analysis of the federation’s data by the Economic Policy Institute.



Academic research has also failed to find evidence that regulation is a significant factor in unemployment. In a blog post on Sept. 5, Jay Livingston, a sociologist at Montclair State University, hypothesized that if regulation were a major problem it would show up in the unemployment rates of industries where regulation has been increasing: the financial sector, medical care and mining/fuel extraction. He found that unemployment rates in these sectors were actually well below the national average. Unemployment is much higher in those industries that one would expect to suffer most from a lack of aggregate demand: construction, leisure and hospitality, business services, wholesale and retail trade, and durable goods.

Gary Burtless, an economist at the Brookings Institution, asserts that if businesses were really concerned about rising regulations, they would be investing now to avoid them. But there is no indication that this is the case. “The real reason for anemic investment and hiring is that businesses are not confident there will be enough potential customers to justify expansion or even routine capital replacement right now,” he says.

In my opinion, regulatory uncertainty is a canard invented by Republicans that allows them to use current economic problems to pursue an agenda supported by the business community year in and year out. In other words, it is a simple case of political opportunism, not a serious effort to deal with high unemployment.

Fewer mass layoffs? Couldn't be because there aren't enough big companies left in the USA to do mass layoffs, could it?

^ What an idiotic statement. Did you even read the article? Please back such ridiculous statements with some kind of fact.

^ Why? That's my opinion. Your article states it is one guy's "hypothesis" (a sociologist's no less), another guy's "opinion" and the words of a left-wing economist from Brookings. Small biz interviews? What, like asking the remainder of Mom & Pop shop owners? I ain't impressed.
obamacare, regulations and UNCERTAINTY are why folks ain't hiring, and uncertainty hinges on the first two items, IMHO.

To “address” the causes of the financial crisis the Obama administration has proposed thousands of pages of regulations riddled with loopholes designed to keep “business as usual” in the financial services sector. The Republican counter to this is their opposition to any regulation as stifling business and as a way to keep “business as usual”.


I look at the Democrats' tactic as the “baffle them (the public) with bullshit” tactic: draft so many pages of meaningless regulations so that they appear that they want to reign in the excesses of the last decade (even though a single page law re-instituting the Glass-Steagall Act would have done far more).


The Republican's are using the opposite tactic of saying any regulation is bad for the economy (even though it is clear that the repeal of regulations is a major cause of the financial collapse). It is always necessary for the Republicans to use the opposite tactic from the Democrats.


What is obvious is that both sides want the same result. What they are doing is simply for public relations: make the citizens think that the politicians are looking out for us. At the same time they are all well paid off, and have no intention of reigning in their bosses. The result will be another financial meltdown in a few years, with probably far worse outcome. It will take another Great Depression before the politicians are forced to take real action.

I don't recall that it was government regulations that killed millions of jobs during the financial crisis, quite the opposite- it was the deregulation of the banking & finance industry that was the primary cause.

^How about fannie+freddie? Yes, the repeal of the Glass-Steagall act was a major blunder IMO. The bailouts of banks when many tried to refuse "help" but were forced to take bailouts so the really crap banks wouldn't look so bad was a ruse.

Germany has a 5.5% unemployment rate. Japan's is 4.5%. Obviously, not too many regulations!

Right. Go ahead and vote for the Obummer again and reap more obstructionist rules and regulations. For those who live in the states, how are those utility bills these days, eh? Love that cap & trade.

Originally Posted by Minnie Maugham

^How about fannie+freddie? Yes, the repeal of the Glass-Steagall act was a major blunder IMO.

Yes, the repeal of the 1933 Glass-Steagall is considered to be one of the primary causes of the financial crisis.

Originally Posted by robuzo

Germany has a 5.5% unemployment rate. Japan's is 4.5%. Obviously, not too many regulations!

Um, no. Germany's rate is 6.7% and likely to grow. Japan's latest is 4.6%, and we know that's fake, as usual.
UPDATE 1-German jobless rate falls to new low in January | Reuters

There is regulation, and there is red tape. Just as citizens in any society require laws, so does business require regulation. So that is one thing, and after the mess of the last few years I don't see how anyone can sensibly deny it. Deregulation proved to be an expensive failure.

There is way too much red tape involved in dealing with the US government though, & also the case with many other governments too. The IRS forms and reporting requirements alone are a nightmare. Business has to deal with other red tape too, and depending on the industry it can be byzantine in its complexity. Making government bureaucracy easier and less time consuming to deal with is a worthy endeavor in itself, and shouldn't be confused with deregulation.