Regulation

The Regulatory Pendulum Has Swung Too Far

The political dispute is not whether to regulate, but how much.

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We need some regulation. Even the most bombastic conservatives recognize this. So everyone also should recognize that when President Obama says the GOP favors "dirtier air [and] dirtier water," he is committing the fallacy of the false alternative. The political dispute is not whether to regulate, but how much.

Everyone also can agree that if an environmental rule can prevent 1 million birth defects at a cost of only one dollar, then the regulation merits adoption – and if a regulation would prevent only one birth defect at a cost of $100 trillion, then it does not. In the real world regulations fall within narrower parameters. And nobody knows for certain precisely how much misery a proposed regulation might prevent, or how much it might cost. Hence the bickering.

Take the EPA's new rules on power-plant emissions. Emission controls are desirable as a general rule, since emissions are what economists call negative externalities: costs of production that are shifted to non-producers, usually without their consent. (Not all externalities are created equal. The aroma of a neighbor's grill is not nearly as annoying as the whine from his leafblower.)

The EPA says its new rules will cost about $10.6 billion by 2016 – but will save anywhere from $59 billion to $140 billion in health costs, forestall  up to 17,000 premature deaths, and prevent up to 130,000 cases of childhood asthma per year. A big net win.

But Susan Dudley, who runs the Regulatory Studies Center at George Washington University, says the new rules will cost almost $11 billion per year. Industry sources estimate the real cost could be more than 10 times that much. And the Manhattan Institute's Diana Furchtgott-Roth notes that the EPA's estimates about asthma benefits seem, well, rather optimistic. In recent decades asthma has become more common even while air quality has improved. The Centers for Disease Control says "the causes of asthma remain unclear." If the CDC is right, then the EPA is just guessing.

Naturally, liberals glom onto the EPA's rosy figures while conservatives seize on the gloomier numbers from skeptics. People tend to reach conclusions first, then seek out supporting evidence and dismiss evidence to the contrary.

Whatever the merits of the new power-plant rules, though, it's clear that the Current Occupant, as they used to call George W., has commenced an era of great new regulatory zeal:

* The Obama administration is finalizing an average of 84 "economically significant" rules (those costing $100 million or more) per year, compared to 62 for Bush and 56 for Bill Clinton.

* In May the EPA tailored new rules for greenhouse-gas emissions that, absent the tailoring, would have affected 6 million factories, landfills, and other sources – and required the EPA, by its own estimates, to increase its workforce from 17,000 employees to 230,000. The New York Times calls such tailoring "contentious." 

* The Department of Labor is considering whether to require disabled individuals to make up at least 7 percent of the workforce of every federal contractor – not only in the aggregate, but within "each job group." According to one summary, contractors would be required to collect and report data on "referrals from applicable employment service delivery systems . . . the 'applicant ratio' of known applicants with disabilities to total applicants . . . the 'hiring ratio,' . . . the 'job fill ratio' . . . . training programs and promotional opportunities for which applicants and employees with a disability were considered . . . a statement of the reason as well as a description of any accommodation considered when it rejects an individual with disability for employment, promotion, or training. . . . a record describing any accommodation that makes possible the selection of an individual with a disability for hire, promotion, or training," etc.

Compliance cost for all of this? God only knows. Yet rules such as those pale in comparison to the gargantuan compliance burdens imposed by Sarbanes-Oxley  and (soon) Obamacare.

* Last summer the FDA carried out an armed raid on Amish farmers in Pennsylvania who were selling raw milk to eager customers.

* The Consumer Product Safety Commission may soon require expensive new flesh-sensing technology on all table saws. (This is being pushed by SawStop, the maker of the technology, which stands to benefit handsomely.) 

* Last year the CPSC recalled a half-million drop-side cribs because of "31 . . . incidents. In six of those incidents children were entrapped between the drop side and crib mattress. Three children suffered from bruises as a result of the entrapment."

You could argue that when regulators recall a half-million cribs because of three bruises – instead of, say, sending crib owners a letter about potential bruising hazards – the  pendulum has swung too far. If you do, however, be prepared: You may be accused of wanting more dead babies by those who delight in the fallacy of the false alternative.