WASHINGTON STATE

Washington State House Democrats

HOUSE DEMOCRATS

The truth about rules and standards: job killers or job makers?

regulationsWashington legislators often hear from constituents that rules, standards and regulations are economy-crushing job killers.But are they?

Two new studies, according to experts cited in this Salon story, say the opposite is true: the economic benefits far outweigh the true costs of things like worker safety rules and fuel efficiency standards for cars.

The Office of Management and Budget – the non-partisan policy experts who staff Congress — studied this issue and said major federal regulations cost between $57 and $84 billion each year, but create $193 to $800 billion in economic savings and benefits.

Click here to read their full 2013 report.

Here’s a key section from the story, explaining why the myth doesn’t hold economic water:

Opponents of regulation often suggest that regulations create uncertainty and therefore stymie growth, but in truth they do the opposite. To understand why, imagine a world without regulation, one in which railroad track gauges are divergent, food and drugs are released without trials and buildings are built on a whim. Americans who visit countries with a weak governance are often surprised to find that the stairs aren’t of equal height. By establishing a minimum standard for environmental degradation, customer safety and worker treatment, regulation can change entire industries.

The auto industry is a quintessential example. Today’s advertisements focus on fuel efficiency and safety, and we take air bags and seat belts for granted, but cars were once death traps. Lincoln explains, “Their market research showed that adding seat belts didn’t help and they’re not seeing profit it it, they’re not seeing dollar signs.” All of that began to change with Ralph Nader’s famous “Unsafe at Any Speed.” Customers didn’t know that cars could be safer and more fuel-efficient until the government began enforcing the regulations. Henry Ford once said, “If I had asked people what they wanted, they would have said faster horses.”

According to the experts in the Salon story, predictions of job losses from new standards and rules are apocalyptic, while claims about possible job creation from cutting rules and regulations are insanely optimistic, often eclipsing the total number of unemployment people in the United States.

One new study, which examines this particular argument, finds it absurd on its face. Taylor Lincoln, who authored the report for Public Citizen, tells Salon the goal was to “point out hypocrisy and contradictions and the chasms between rhetoric and reality.” To that end, the report cites one Heritage Foundation study which asserted that a more efficient regulatory system could create 9.6 million jobs. The problem, as Washington Post columnist Steven Pearlstein noted: “there are only 7 million unemployed Americans.”