Right now there’s a shortage of orange juice in the US because of a number of diseases, especially one called “greening” that has been destroying the crop.
However, there’s an alternative – import Brazilian orange juice.
But we can’t:
The U.S. Food and Drug Administration, after several weeks of deliberation, has blocked imports of frozen, concentrated orange juice from Brazil, probably for the next 18 months or so, even though the agency says the juice is perfectly safe.
So if it is admittedly safe and we need the juice to help meet demand (and keep the price down) why can’t we import this juice? Why can’t we do what is necessary with something the FDA says is safe?
The FDA’s explanation is that its hands are legally tied. Its tests show that practically all concentrated juice from Brazil currently contains traces of the fungicide carbendazim, first detected in December by Coca-Cola, maker of Minute Maid juices. The amounts are small — so small that the U.S. Environmental Protection Agency says no consumers should be concerned.
The problem is, carbendazim has not been used on oranges in the U.S. in recent years, and the legal permission to use it on that crop has lapsed. As a result, there’s not a legal "tolerance" for residues of this pesticide in orange products.
So, according to the FDA, any speck of this fungicide, if found in orange juice, is an illegal adulterant and won’t be allowed, even though residues of the same fungicide are allowed in many other foods, including apple and grape juice.
There is no “legal permission” to use the fungicide on the crop because such “permission” has lapsed and thus there is no “legal tolerance” for any residue no matter how benign. Consequently, because of that lapse the regulatory regime says “no go” on the import of something perfectly safe and in demand.
The result of the unwarranted ban (this orange juice is welcome in Europe, by the way):
In 2010, about 11 percent of all the orange juice consumed in America came from Brazil, according to the U.S. Department of Agriculture. That share may seem modest, but economist Thomas Prusa of Rutgers tells The Salt that cutting it out could boost wholesale prices of concentrated orange juice by 20 to 45 percent.
So gas prices aren’t the only thing going up soon. And in the case of orange juice, the price increase can be tied directly to government regulation.
As orange juice goes up by 20 to 45%, who is it that will be hurt the most? That’s right – the poorest among us who now either have to find a substitute or perhaps forgo the juice altogether.
One of the claims President Obama made in his State of the Union address was that his administration was engaged in cutting the red tape and doing away with regulations that stood in the way of prosperity.
There is no question that some regulations are outdated, unnecessary, or too costly. In fact, I’ve approved fewer regulations in the first three years of my presidency than my Republican predecessor did in his. I’ve ordered every federal agency to eliminate rules that don’t make sense. We’ve already announced over 500 reforms, and just a fraction of them will save business and citizens more than $10 billion over the next five years.
Of course, like many of his claims, the devil is in the details and upon closer scrutiny, the claim has no real foundation in fact.
His first claim is a carefully constructed lie as Free Enterprise points out:
The White House admits that its rules have so far cost $25 billion, which is much more than at the same point during the Clinton and George W. Bush administrations.
The claim is also couched in non-specifics for a reason. The “500 reforms” are mostly regulations with little or no monetary impact on those who have to satisfy them. However, the administration has added more rules that cross the magic 100 million dollar impact line than any other administration. And, of course, those require, by law, that the monetary impact be assessed. Here’s an example of one (PDF, pg 69):
Enforcement Fairness Act (5 U.S.C. 801 et seq.). This interim final rule:
a. Will have an annual effect on the economy of $100 million or more. This rule will affect every new well on the OCS, and every operator, both large and small must meet the same criteria for well construction regardless of company size. This rulemaking may have a significant economic effect on a substantial number of small entities and the impact on small businesses will be analyzed more thoroughly in an Initial Regulatory Flexibility Analysis. While large companies will bear the majority of these costs, small companies as both leaseholders and contractors supporting OCS drilling operations will be affected.
Considering the new requirements for redundant barriers and new tests, we estimate that this rulemaking will add an average of about $1.42 million to each new deepwater well drilled and completed with a MODU, $170 thousand for each new deepwater well drilled with a platform rig, and $90 thousand for each new shallow water well. While not an insignificant amount, we note this extra recurring cost is less than 2 percent of the cost of drilling a well in deepwater and around 1 percent for most shallow water wells.
b. Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions. The impact on domestic deepwater hydrocarbon production as a result of these regulations is expected to be negative, but the size of the impact is not expected to materially impact the world oil markets. The deepwater GOM is an oil province and the domestic crude oil prices are set by the world oil markets. Currently there is sufficient spare capacity in OPEC to offset a decrease in GOM deepwater production that could occur as a result of this rule.
Therefore, the increase in the price of hydrocarbon products to consumers from the increased cost to drill and operate on the OCS is expected to be minimal. However, more of the oil for domestic consumption may be purchased from overseas markets because the cost of OCS oil and gas production will rise relative to other sources of supply. This shift would contribute negatively to our balance of trade.
These rules were proposed in the wake of the BP oil spill in the Gulf of Mexico (GOM). They clearly identify the effect of the rules. Ironically they include increased cost to consumers, more dependence on foreign oil, and a negative increase in the balance of trade – all problems the administration and most economists identify is problems to be solved if the economy is to move forward.
Now, some may argue that these rules were necessary. I’d argue that perhaps some new regulation was necessary, but it should have been a regulation which, to the best of its ability, mitigated the effects listed to the minimum, or eliminated them altogether. Instead, the regulators airily note the effects and then blow them off. In reality, regulators really don’t care if it costs consumers more, deepens our dependence on foreign oil or ups the balance of trade.
In the State of the Union address, Obama tried to grab the middle and pretend he is a friend to small business:
You see, an economy built to last is one where we encourage the talent and ingenuity of every person in this country. That means women should earn equal pay for equal work. (Applause.) It means we should support everyone who’s willing to work, and every risk-taker and entrepreneur who aspires to become the next Steve Jobs.
After all, innovation is what America has always been about. Most new jobs are created in start-ups and small businesses. So let’s pass an agenda that helps them succeed. Tear down regulations that prevent aspiring entrepreneurs from getting the financing to grow. (Applause.) Expand tax relief to small businesses that are raising wages and creating good jobs. Both parties agree on these ideas. So put them in a bill, and get it on my desk this year. (Applause.)
But again facts undermine the claim. As the Small Business Association reports, regulations disproportionately effect small businesses:
In the face of yet higher costs of federal regulations, the research shows that small businesses continue to bear a disproportionate share of the federal regulatory burden. The findings are consistent with those in Hopkins (1995), Crain and Hopkins (2001), and Crain (2005).
The research finds that the total costs of federal regulations have further increased from the level established in the 2005 study, as have the costs per employee. More specifically, the total cost of federal regulations has increased to $1.75 trillion, while the updated cost per employee for firms with fewer than 20 employees is now $10,585 (a 36 percent difference between the costs incurred by small firms when compared with their larger counterparts).
Say one thing while doing the opposite. Vintage Obama. Tomorrow’s Steve Jobs would have a very expensive uphill climb in today’s regulatory climate. The net effect? $1.75 trillion dollars of cost to small businesses, the place where “most jobs are created” per Obama.
The SBA also reports:
Environmental regulations appear to be the main cost drivers in determining the severity of the disproportionate impact on small firms. Compliance with environmental regulations costs 364 percent more in small firms than in large firms. The cost of tax compliance is 206 percent higher in small firms than the cost in large firms.
Those regulations are primarily driven by OSHA and EPA. And there’s no secret about the expansion of both regulators and regulation being pushed by Obama’s EPA focused on the environment.
The “good” news, however, this is one “shovel ready” project that seems to be creating jobs:
Large, small, global and regional — law firms are opening Washington offices at a rate not seen since before the recession, as they position themselves for work centered around the capital’s regulatory machinery.
Yes, I was being very facetious, however, when sharks smell blood in the water, they tend to gather in large numbers in anticipation of a feeding frenzy. Despite Obama’s claims to the contrary, there’s a reason this is happening, and it isn’t because the administration is lessening or cutting regulations, it is because it is imposing more and needs additional legal enforcement help (there’s also the side that will concentrate on defense).
Don’t forget, the $1.75 trillion dollar cost above applies to only small business. That means that the total cost of regulation is much higher than that. Also don’t forget, when Obama makes his claim about not passing as many regulations as previous administrations, that’s meaningless without an dollar effect numbers. As noted, in regulatory cost to the economy, he’s passed many more costly regulations at this point in his presidency than did the previous administration.
The bottom line, of course, is that A) you can’t believe a thing the man says and B) contrary to his claims, he’s imposed more cost on the economy via regulation, not less.
Finally, if you think it is bad now, wait until ObamaCare kicks in. One of the reasons law firms are beefing up their Washington DC presence is in anticipation of that law going into effect. If you think it’s a regulatory nightmare now, just wait. It’s going to get worse.
Sean Hackbarth, commenting on the increase in lawyers:
Resources spent on paperwork and re-jiggering business plans is less money going to business investment and job creation, but at least we know someone is benefiting from the regulatory pile-on.
Shovel-ready – and not in the good sense.
I don’t imagine anyone would argue that it is supposed to be like this, however, this is reality in one city in one state and I’d guess that its true in most places to one degree or another. The place in question? San Francisco, where a woman wanted to open a simple ice cream shop.
Ms. Pries said it took two years to open the restaurant, due largely to the city’s morass of permits, procedures and approvals required to start a small business. While waiting for permission to operate, she still had to pay rent and other costs, going deeper into debt each passing month without knowing for sure if she would ever be allowed to open.
“It’s just a huge risk,” she said, noting that the financing came from family and friends, not a bank. “At several points you wonder if you should just walk away and take the loss.”
Ms. Pries said she had to endure months of runaround and pay a lawyer to determine whether her location (a former grocery, vacant for years) was eligible to become a restaurant. There were permit fees of $20,000; a demand that she create a detailed map of all existing area businesses (the city didn’t have one); and an $11,000 charge just to turn on the water.
Imagine how many potential business owners would have said “the hell with it” and, if possible, gone elsewhere or shelved the idea completely? Had that happened in this case, had the woman in question not had the patience of Job and enough money to weather the 2 years in question, 14 full and part-time workers wouldn’t be employed there.
That’s the problem with stories like this – its hard to get a handle on how many businesses have been discouraged by such a permitting and regulation regime, but you have to assume they are plenty.
It should not take two years for a government to say “okay” to a business. Nor should there be exorbitant fees associated with it.
Thankfully San Francisco has begun to recognize the enormity of its problem and attempt to do something about it. A little thing called “reality”, in the guise of the headquarters for Twitter, has finally begun to bring some government officials around:
“The city has had the reputation of being a difficult place, and a hostile place, to do business,” said Mark Farrell, the city supervisor who has the most private-sector experience (he still operates a venture capital firm). “We’re changing the dialogue.”
According to Mr. Farrell, a critical shift occurred last year when supervisors approved a tax incentive to keep the headquarters of Twitter, the social network, in the city after the company threatened to move.
But he admitted that such actions were relatively easy compared with reforming the city’s entrenched bureaucracy. “To change the inner workings of government is a longer proposition,” he said.
Christina Olague, a former Planning Commission president who was recently appointed city supervisor, said that planning codes governing businesses had ballooned over the years to become hundreds of pages long. “It’s so convoluted,” she said. “It’s so difficult for these businesses to move ahead.”
But the byzantine, time consuming and costly regulatory process, for the most part, still remains. Check out this animated video which illustrates how absurd it can be.
As we’ve said any number of times here, if government wants to play a role in the economy and the economic recovery, perhaps the best role it can play is, for the most part, to get the hell out of the way.
The editors of the Washington Examiner consider the probable effects of the new CAFE standards (being imposed by the EPA now instead of NHTSA) and ask a pertinent question:
Getting from the current 35 mpg CAFE standard to 54.5 can be achieved by such expedients as making air conditioning systems work more efficiently. We have a bridge in Brooklyn to sell to anybody who thinks that’s even remotely realistic. There is one primary method of increasing fuel economy — weight reduction. That in turn means automakers will have to use much more exotic materials, including especially the petroleum-processing byproduct known as “plastic.” But using more plastic will make it much more difficult to satisfy current federal safety standards. The bottom-line will be much more expensive vehicles and dramatically fewer kinds of vehicles.
Total costs, as calculated by the EPA, will exceed $157 billion, making this by far the most expensive CAFE rule ever. For comparison, the previous rule in 2010 cost $51 billion, according to the EPA. But the EPA doesn’t include this fact in its calculation: Annual U.S. car sales are 14-16 million units, yet over time, this rule will remove the equivalent of half a year’s worth of buyers. Will that be when the EPA takes a cue from Obamacare and issues an individual mandate that we all must buy Chevy Volts?
I’m just curious, for those who support the individual mandate dictated by Obamacare, what is the argument that such an electric car mandate isn’t possible? If the federal government can force us to purchase insurance from the companies it allows to offer the product based on the idea that health care is a national issue, how is promoting cleaner air and more energy security not the same thing? Indeed, it would seem that the arguments are even stronger for forcing everyone to buy electric cars if furthering the “common good” is the only real restriction on federal power.
So what is the difference from a legal, constitutional standpoint? Is there one?
John Goodman poses a scenario for you to consider:
Suppose you are accused of a crime and suppose your lawyer is paid the way doctors are paid. That is, suppose some third-party payer bureaucracy pays your lawyer a different fee for each separate task she performs in your defense. Just to make up some numbers that reflect the full degree of arbitrariness we find in medicine, let’s suppose your lawyer is paid $50 per hour for jury selection and $500 per hour for making your final case to the jury.
What would happen? At the end of your trial, your lawyer’s summation would be stirring, compelling, logical and persuasive. In fact, it might well get you off scot free if only it were delivered to the right jury. But you don’t have the right jury. Because of the fee schedule, your lawyer skimped on jury selection way back at the beginning of your trial.
This is why you don’t want to pay a lawyer, or any other professional, by task. You want your lawyer to be able to reallocate her time — in this case, from the summation speech to the voir dire proceeding. If each hour of her time is compensated at the same rate, she will feel free to allocate the last hour spent on your case to its highest valued use rather than to the activity that is paid the highest fee.
None of us would ever want to pay a lawyer by task, would we (not talking about a will or legal document production here, but instead some form of defense against charges which necessitates a jury trial and requiring the accomplishment of many tasks)? We’d instead insist upon paying them for a package of services designed to do whatever is necessary to defend us to the best of their ability with the ultimate goal of us walking free.
So why is it we can’t demand the same of doctors? Why can’t we demand a package of services designed by them to address all of our medical problems?
Well if your stuck with Medicare or Medicaid, you’re stuck with government price fixing and payment by task, that’s why. First the price fixing:
Medicare has a list of some 7,500 separate tasks it pays physicians to perform. For each task there is a price that varies according to location and other factors. Of the 800,000 practicing physicians in this country, not all are in Medicare and no doctor is going to perform every task on Medicare’s list.
Yet Medicare is potentially setting about 6 billion prices across the country at any one time.
OK? Bad enough that Medicare has completely removed the price mechanism from the process. As economist Dr. Mark Perry notes:
These problems sound a lot like the deficiencies of Soviet-style central planning in general when the government, rather than the market, sets prices, see Economic Calculation Problem.
Exactly and stultifyingly obvious, correct? In fact, it’s something one shouldn’t have to point out. Nor, would it seem, should it be something that we’re doing either. But we are. You just have to remember, our government doesn’t care about history, because, well, you know, it will get it right where all these other governments have failed. Just watch.
If the price fixing isn’t bad enough, it has also hit upon a procedure that actually inhibits the delivery of good health care rather than incentivizing it.
Medicare has strict rules about how tasks can be combined. For example, “special needs” patients typically have five or more comorbidities — a fancy way of saying that a lot of things are going wrong at once. These patients are costing Medicare about $60,000 a year and they consume a large share of Medicare’s entire budget. Ideally, when one of these patients sees a doctor, the doctor will deal with all five problems sequentially. That would economize on the patient’s time and ensure that the treatment regime for each malady is integrated and consistent with all the others.
Under Medicare’s payment system, however, a specialist can only bill Medicare the full fee for treating one of the five conditions during a single visit. If she treats the other four, she can only bill half price for those services. It’s even worse for primary care physicians. They cannot bill anything for treating the additional four conditions.
So, for example, if you have diabetes, COPD, high blood pressure or any combination of a number of other chronic diseases, tough cookies, your doc can only treat one per visit – unless, of course, he or she wants to work for free on the others.
Don’t believe me?
[When Dr. Young] sees Medicare or Medicaid patients at Tarrant County’s JPS Physicians Group, he can only deal with one ailment at a time. Even if a patient has several chronic diseases — diabetes, congestive heart failure, high blood pressure — the government’s payment rules allow him to only charge for one.
“You could spend the extra time and deal with everything, but you are completely giving away your services to do that,” he said. Patients are told to schedule another appointment or see a specialist.
Young calls the payment rules “ridiculously complicated.”
That has nothing to do with being complicated. It has to do with stupidity overruling common sense and the stupidity being enforced by an uncaring bureaucracy. “Rulz is rulz, Doc”. Do what is best for your patient and do it for free – that’s one way to lower costs, isn’t it?
But don’t forget – government involvement will mean better care at lower cost. That’s the promise, right?
Instead government is now redefining “better” to mean “their way or the highway”. It has nothing to do with what is better for the patient or the doctor. It has to do with what is better politically. And, of course, better for the bureaucracy. In this case, that means squeezing the doctor for everything they can get at the expense of the patient. Since you don’t have a choice about Medicare when you reach 65, any doctor you see doesn’t have a choice about how he or she treats you.
The only choice you have?
Live with it … if you can.
What if you passed a law that required the use of alternative fuels from particular sources to be blended with petroleum based fuels to help “break our dependence” on petroleum from “unfriendly countries” (and cut greenhouse gases). And what if, a few years later, new and abundant sources of domestic oil and gas were found, plus even more from secure allies like Canada?
Wouldn’t it makes sense to reconsider the original legislation in light of the new finds.
Oh, and one more thing … what if one of the alternative fuels mandated to be mixed with gasoline hadn’t yet materialized commercially? Would you exempt refiners or fine them?
Common sense says you exempt them. The EPA has, instead, chosen to fine them.
When the companies that supply motor fuel close the books on 2011, they will pay about $6.8 million in penalties to the Treasury because they failed to mix a special type of biofuel into their gasoline and diesel as required by law.
But there was none to be had. Outside a handful of laboratories and workshops, the ingredient, cellulosic biofuel, does not exist.
Somehow that appears to be considered the fault of the refiners. And the EPA is requiring the fines be levied and paid.
Any guess as to who will end up paying those fines?
The 2007 law requires three types of bio fuels be mixed: “car and truck fuel made from cellulose, diesel fuel made from biomass and fuel made from biological materials but with a 50 percent reduction in greenhouse gases” according to the NY Times.
But cellulosic fuel is commercially unavailable. There simply is none to be had.
Michael J. McAdams, executive director of the Advanced Biofuels Association, said the state of the technology for turning biological material like wood chips or nonfood plants straight into hydrocarbons — instead of relying on conversion by nature over millions of years, which is how crude oil originates — was advancing but was not yet ready for commercial introduction.
Of the technologies that are being tried out, he added, “There are some that are closer to the beaker and some that are closer to the barrel.”
But the requirement – and the fines – remain.
Meanwhile, time has marched on and guess what?
Mr. Drevna of the refiners association argued that in contrast to 2007, when Congress passed the law, “all of a sudden we’re starting to find tremendous resources of our own, oil and natural gas, here in the United States, because of fracking,” referring to a drilling process that involves injecting chemicals and water into underground rock to release gas and oil.
What is more, the industry expects the 1,700-mile Keystone Pipeline, which would run from oil sands deposits in Canada to the Gulf Coast, to provide more fuel for refineries, he said.
But the EPA is unmoved by that or the fact that cellulosic fuel is unavailable:
But Cathy Milbourn, an E.P.A. spokeswoman, said that her agency still believed that the 8.65-million-gallon quota for cellulosic ethanol for 2012 was “reasonably attainable.” By setting a quota, she added, “we avoid a situation where real cellulosic biofuel production exceeds the mandated volume,” which would weaken demand.
Hmmm … expert: “We’re closer to the beaker than the barrel”. Bureaucrat: “Even though the product is not commercially available, we still believe the mandate for this year is reasonably attainable.”
Yet there is nothing on the horizon for commercially available cellulosic ethanol in 2012:
One possible early source is the energy company Poet, a large producer of ethanol from corn kernels. The company is doing early work now on a site in Emmetsburg, Iowa, that is supposed to produce up to 25 million gallons a year of fuel alcohol beginning in 2013 from corn cobs.
And Mascoma, a company partly owned by General Motors, announced last month that it would get up to $80 million from the Energy Department to help build a plant in Kinross, Mich., that is supposed to make fuel alcohol from wood waste. Valero Energy, the oil company, and the State of Michigan are also providing funds.
Yet other cellulosic fuel efforts have faltered. A year ago, after it was offered more than $150 million in government grants, Range Fuels closed a commercial factory in Soperton, Ga., where pine chips were to be turned into fuel alcohols, because it ran into technological problems.
Yes that’s right folks, Government Motors is sucking up $80 mil in taxpayer dollars for a startup on a product that experts say isn’t ready for prime time and, as demonstrated by the Georgia plant, still has technical problems which apparently prohibit the commercial production of the desired alternate fuel (after it sucked up $150 mil of tax payer money).
This is ideological agenda driven madness abetted by bureaucratic stupidity. However, no one has ever claimed bureaucracies deal in reality. They’re fall back for such absurdities is process. Fining companies for not using a product that isn’t available but mandated simply underlines how decidedly absurd they can be. The EPA is on a mission. It has been directed to push that agenda by whatever means necessary.
Meanwhile the changes that should be reflected in the new reality – more abundant domestic and safe oil and gas, are being roundly ignored and their exploitation mostly hindered. And you, Mr. and Mrs. Taxpayer, are being fined and looted to push this absurd agenda.
The regulatory state again finds a new way to try to handicap businesses. This time it is the EEOC:
Employers are facing more uncertainty in the wake of a letter from the Equal Employment Opportunity Commission warning them that requiring a high school diploma from a job applicant might violate the Americans with Disabilities Act.
The development also has some wondering whether the agency’s advice will result in an educational backlash by creating less of an incentive for some high school students to graduate.
The “informal discussion letter” from the EEOC said an employer’s requirement of a high school diploma, long a standard criterion for screening potential employees, must be “job-related for the position in question and consistent with business necessity.” The letter was posted on the commission’s website on Dec. 2.
Job related things like a modicum of assurance, supposedly offered by high school completion, that a candidate might be able to read and write?
And if that isn’t a necessity anymore, then why do it. Of course that means no college so no studying OWS for credit, but hey, Wal-Mart may have to take you.
Many, many, many people, upon the passage of the feel good Americans With Disabilities Act warned that stupidity such as this was the inevitable and logical end game of the regulators.
As you can see, and as usual, they were right.
Maria Greco Danaher, a lawyer with the labor and employment law firm Ogletree Deakins, said the EEOC letter means that employers must determine whether job applicants whose learning disabilities kept them from obtaining diplomas can perform the essential job functions, with or without reasonable accommodation. She said the development is “worthy of notice” for employers.
“While an employer is not required to ‘prefer’ a learning-disabled applicant over other applicants with more extensive qualifications, it is clear that the EEOC is informing employers that disabled individuals cannot be excluded from consideration for employment based upon artificial barriers in the form of inflexible qualification standards,” she wrote in a blog post.
So, it is the job of the company, according to Danaher, to make these sorts of determinations because the EEOC thinks it is discriminatory to simply require a high school diploma which has always been used to filter candidates?
One assumes then that requiring a college degree would fall in the same category, no? I mean most of those who require it, other than wanting someone who has demonstrated the intelligence and perseverance to complete a prescribed course of study satisfactorily (and the sort of positive traits that relate to work that such an accomplishment brings), really have no “job related” requirements except the usual: the ability write, read and do basic math. How dare they?
This is an “informal discussion letter”, better known among those who follow politics as a “trial balloon”. The EEOC has every intention of trying to make this a regulation. What they’re doing now is similar to the “public comment” portion that is supposed to give the public the ability to point out the huge downside of their proposal before they make it a regulation anyway.
Oh, and about that incentive to finish high school being lessened by something like this? Hand wave away:
“No, we don’t think the regulation would discourage people from obtaining high school diplomas,” said Peggy Mastroianni, legal counsel for the EEOC. “People are aware that they need all the education they can get.”
Are they? That explains the 8% drop out rate I guess. But look at that statement. Pure assertion on both ends of it. “We don’t think” … famous last words of the stereotypical bureaucrat. There’s never been a regulation that had unintended consequences, has there?
Rep. Keith Ellison, a Democrat member of the House from MN, explained why he thought creating more and more regulations was a good idea. You see, the more you pass, the more people businesses have to hire to comply with them, per Ellison:
"I think the answer is no," Ellison said when asked if he believes regulations kill jobs. "And here is why: When we talked about increasing fuel efficiency standards, the industry responded, and they need engineers and designers and manufacturers, and they need actually more people to help respond to the new requirement."
"I believe if the government says, look, we have got to reduce our carbon footprint, you will kick into gear a whole number of people that know how to do that or have ideas about that, and that will be a job engine. I understand what you mean, because if anything adds a cost to a business, you could assume that that will diminish that business’s ability to hire. But I don’t think that’s actually right. I think what businesses want is customers and what — if they are selling product, if they have a product to sell they will do well even if they have some new regulations to meet," the Congressman said.
The economic ignorance in that statement is dumbfounding. The man obviously has no idea of what productive vs. non-productive work entails. Bureaucrats don’t “produce” anything but cost. They impose a cost burden that the producer must pass on or eat.
Most producers choose to pass on the cost burden in the price of what they produce (it obviously depends on the competitiveness of the market, profit margins, etc.). So in essence, every new regulation that imposes a compliance cost on a producer means those who consume the product end up paying the compliance cost in the price of the product at some point or another. And the man hours that could have been used in a productive job are wasted in seeking compliance with bureaucratic regulation.
These are the guys in Washington DC making decisions about your future. They’re deciding what portion of what you earn you should be allowed to keep. And they have no idea of what makes an economy run.
Here’s a representative that figures a job is a job. And he actually thinks he’s creating jobs what will benefit the economy by increasing regulation and bureaucracy.
Unfortunately his type are more prevalent that you might imagine. And our present situation is beyond their understanding. How does one go on a national television network and make statements like that and think they’re being profound when in fact what they say is profoundly ignorant? He obviously doesn’t know that. That’s just scary.
When all is said and done about our current situation, when the hindsight evaluations are made and the scope of the disaster is understood, it will be clear that people like Rep. Keith Ellison were as responsible as anyone for our economy’s inability to recover.
And he won’t even know it.
And frankly, I think they’re right:
– There is little appetite among American voters for additional regulations coming out of Washington. Three quarters (74%) of voters throughout the country believe that businesses and consumers are over-regulated. Further, another two thirds (67%) believe that regulations have increased over the past few years. These percentages include majorities of all partisan affiliations, with 91% of Republicans, 75% of Independents and 58% of Democrats saying businesses/consumers are over-regulated.
Now you may argue that “over-regulation” may mean different things to different groups. However in each case the term “over” has specific meaning – it means there’s too much regulation. While they may argue about the degree of over-regulation, it appears that each and every group sees over-regulation in the same and proper light.
– A key fear among voters is that regulations will hinder job creation, as most believe the result of new regulation will be either job losses (47%) or increased prices for American made goods and services (22%).
Or both. You see, businesses will absorb only so much (job losses) before passing along the cost of regulatory compliance in the cost of their goods and services. We’re well past the first part in this recession. Businesses are about as lean and mean as they can stand to be and still function well. Additional regulatory cost, then, is likely to be passed on to consumers – another among many reasons consumer confidence is down.
– More than two thirds (70%) believe increasing the number of regulations on American businesses will result in more jobs moving overseas. Also, majorities agree that the increasing number of regulations have created uncertainty for large and small businesses (66%), and that agencies who enforce regulations fail to consider how their decisions lead to increased prices for consumers and job losses (69%).
All three of these beliefs among those polled is on the money. The amount of regulation is a key consideration for businesses when they assess a business climate. Their cost is calculated in the cost of doing business there. And when that cost is deemed to be too much or too unreasonable, businesses look around for a less costly place to establish themselves. We’ve seen this right here in the US as states with more regulation and higher taxes lose businesses to states that impose a less costly regime of taxes and regulations. They don’t call the Midwest the “Rust Belt” for nothing.
And those polled are right when they say they believe those who impose regulations “fail to consider how their decisions lead to increased prices for consumers and job losses”. But while regulators may not consider it, voters apparently do:
– One of the highest points of agreement in the survey is the fact that 73% concur that “every time the federal government mandates a new regulation on America’s large and small business, the prices of American made good and services like gasoline and food go up.” Only 22% supported the view that “while many federal regulations might be just another burden to operations of America’s large and small businesses, customers do not see major cost increases for American made goods and services like gasoline and food.”
In a study, The Small Business Association found that the regulatory burden on small business in this country was quite high:
The research finds that the cost of federal regulations totals $1.1 trillion; the cost per employee for firms with fewer than 20 employees is $7,647.
Under 20 employees is indeed a “small business” yet most would agree, $7,647 in compliance costs per employee is a lot of money. It is over $140,000 for the 20 employee firm. That money has to be made up somewhere, just to break even, much less turn a profit. And it is clear that depending on the type of firm and needs of the employer, any number of employees could be hired for that amount. And don’t forget, small businesses account for about 80% of the jobs in the US.
So it is clear that there’s a tremendous regulatory burden that has been placed on the businesses of America that most feel over-regulate them and cost jobs and increase prices.
There’s a move afoot within the Obama administration to cut regulation. That’s a good thing. But we have to remember, it’s the Obama administration where they usually talk the talk and never walk the walk. One way to get the economy moving is to lift some of the burdensome regulation and its related costs.
So who should be leading this charge? The executive branch. And, as the poll indicates, most voters don’t understand that it is at that branch the buck stops. But they are clear in what they want – much more consideration and an amended approval process before new regulations are imposed:
– Voters are simply unaware that Congress is not in a lead position with regard to regulation, as a majority say that Congress (52%) creates regulations. However, there is a strong desire for checks and balances in creating regulations, as two thirds (65%) favor requiring regulations be approved by Congress and the President before they are enforced. Voters do not want a regulatory process that takes away legislative duties reserved for Congress – just as they do not want judges legislating from the bench. This strong support for Congressional involvement is consistent across partisan groups, including among Democrats (67%), Republicans (65%) and Independents (64%).
Of course that would mean that most oppose the unilateral imposition of new regulation by the executive branch as we’ve seen during this administration.
All that is not to say that at some level, most Americans see some necessity for regulation:
– There are some positive connections to regulations, with solid majorities saying they are positively impacted by those that require certain safety levels for drinking water (72%) or require controls to ensure better safety at schools and in the workplace (66%).
But, not like this:
– When presented with a lengthy explanation of the Boeing case — where the federal government has filed a lawsuit over the their motivations for locating a new facility in the non-union state of South Carolina — fully 78% of voters side with Boeing in agreeing that a business should be able to open a facility in any state, and that the government should not be involve in the decision about where Boeing or any company locates new plants.
A very interesting poll, and one that needs to be in front of every politician and department executive in government. Back off, unchain the engine of prosperity and listen to the people. They’re pretty clear here in what they want. A less costly and intrusive regulatory regime and government out of places it doesn’t belong – like in the Boeing example.