"The leader of the incipient regulation rebellion is Prof. Murray L. Weidenbaum, director of the Center for the Study of American Business," wrote National Review last July 7. Added columnist Kevin Phillips on another occasion, "Murray Weidenbaum is to the study of business regulation what Albert Einstein was to the theory of relativity: by far and away top man in the field."
That may be high praise, but it's not really exaggeration. For Weidenbaum has probably done more than any other single individual to uncover and publicize the high and growing costs of government regulation. The Center for the Study of American Business at Washington University in St. Louis—of which he is the founder and guiding light—is regularly quoted as the authoritative source on such costs. And Weidenbaum's horror stories of regulations gone wild are cited with glee by newspapers and magazines.
One of Weidenbaum's pet peeves is the ironic consequences of many regulations.
• After Congress passed the Employee Retirement Income Security Act (ERISA), supposedly to protect pensioners, hundreds of small companies dropped their pension plans altogether because they couldn't afford to comply with the regulations.
• Weidenbaum's files likewise bulge with cases of foundries closing because they could not afford to comply with the myriad EPA and OSHA regulations.
• The Davis-Bacon Act requires construction firms to pay the "prevailing wage" on government contracts. But since this is defined by urban wage scales, firms in rural areas like Appalachia frequently lose out. "They can't pay their workers on governmental projects a whopping differential over their workers on commercial projects," explains Weidenbaum. As a result, big-city firms get the jobs "and the taxpayer, in the goodness of his or her heart, doesn't bail out the poor people of Appalachia but subsidizes union workers from Pittsburgh."
One of Weidenbaum's most widely quoted studies is his analysis of the total cost of government regulation. Beginning with his now-classic Government-Mandated Price Increases (1975), he pointed out that the principal cost of these regulations is not the budgets of the agencies—CAB, ICC, FTC, OSHA, etc.—but the unproductive expenses imposed on firms and individuals in order to comply. In 1976, for example, estimates Weidenbaum, direct regulatory agency budgets totaled $3.2 billion while compliance costs were a staggering $62.9 billion.
Analyses such as these, needless to say, have not endeared Weidenbaum to advocates of big government. But that doesn't seem to bother him. For his studies of government and business are built on a solid foundation of academic training and real-world experience—in both business and government. Thus, when he writes about bureaucratic behavior, he knows full well what he's talking about from having been there.
Born in Brooklyn in 1927, Weidenbaum grew up during the Depression. Like many poor New York City youth during that era, City College provided him with an exit visa. He graduated in 1948 and proceeded to an M.A. in economics from Columbia. Armed with that degree he went to work for the Bureau of the Budget, returning to academia to receive a Princeton Ph.D. in 1958. For the next five years he served as corporate economist of the Boeing Company, learning first-hand about the defense industry, and in 1964 joined the Economics Department of Washington University, serving as chairman from 1966 to 1969. He then served two years in the Treasury Department as assistant secretary for economic policy. On returning to the university, Weidenbaum became Mallinckrodt Distinguished University Professor, a post he continues to hold.
But it was in 1975 that many of Weidenbaum's plans came to fruition, with the incorporation of the Center for the Study of American Business. "We set up the Center to offset the massive ignorance on American campuses of the vital role of the American business system," Weidenbaum says. Start-up funds were provided by the John M. Olin Foundation, enabling the center to get off the ground and begin operations without devoting full-time efforts to fund raising. But those efforts, combined with the center's steadily growing output and influence, have resulted in over 90 foundations, businesses, and individuals becoming regular donors.
The center houses a number of resident scholars who conduct policy-related research and writing on various business-government interactions. They are increasingly asked to testify before congressional committees—for example, Lee Benham explaining his finding that state prohibitions on price advertising lead to higher prices for eyeglasses; and as a result of Robert DeFina's working paper on the costs of federal regulations, Weidenbaum was invited last April to testify before the Joint Economic Subcommittee on Economic Growth.
Weidenbaum's thoughts on the economy and current political/economic issues—energy prices, minimum wage increases, tax cuts, etc.—are increasingly quoted, thanks in part to his role as a member of Time's Board of Economists. Though his free-market views are part of what he deems a "permanent minority" on the board, he says he has noticed "a swing to the right" during the past year, both in the board's deliberations and in the magazine's Business and Economics section. "I do believe that our message is getting through," he told us.
Though Weidenbaum stops short of advocating an end to government regulation, his calls for economic-impact statements and cost-benefit studies—if heeded—would lead to major cutbacks in today's plethora of bureaus and rules. That could give advocates of deregulation a lot more breathing room to press their case, in an increasingly robust economy. Already, the foes of regulation have succeeded in putting the big-governmentalists on the defensive. And that encouraging development is due in no small part to the efforts and enthusiasm of Murray L. Weidenbaum.