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Is regulation destroying economy?

The EPA in specific, and federal regulations in general, have been the focus of mostly Republican criticism since the election of President Obama.

The argument is that regulatory excess is hurting the U.S. economy by reducing our competitiveness internationally and by costing potential U.S. jobs due to higher consumer prices impacted by the cost of compliance.

In terms of the effect of regulatory impact against our manufacturing competitors there is little doubt that many of those competitors, particularly in less developed countries, have far fewer regulations regarding the environment than does the U.S.

The growing Chinese economy for example is still building new coal power plants with few scrubbing technology applications, expensive methods used to significantly reduce air pollution.

While many other factors, like wages, benefits, availability of materials, shipping costs and tax rates have perhaps far greater pricing influence than regulatory differences, every cost factor matters when attempting to succeed in international markets.

On the basis of such comparative factors critics do have a basis to, at the very least, focus attention on the importance of regulations applied having practical considerations as a necessity for implementation.

Some have suggested a regulatory cost impact analysis prior to regulatory approval, a method that might address, at least in part, this concern.

The other concern raised by those who suggest that regulations damage competitiveness is that the burden of “excessive” regulations, whether in health care, manufacturing, banking or auto fleet mileage standards, is that the higher the costs resulting from regulatory rules hurts jobs by raising prices for consumers.

One contemporary issue is the EPA requirements for scrubbing technology for coal supplied power plants. While the coal industry has coined the phrase “clean coal” the truth is coal is not a clean burning fuel and current technology including a final, smokestack cleaning to protect the air from a dangerous level of particulates to consumers.

Installing the technology in existing coal energy facilities is so expensive that many of these plants many close rather than convert. One Ohio energy producer has made the decision to close and built new, smaller producing, nuclear power plants.

There is a factual basis to both claims by critics of regulatory cost and economic impact. But there is a more important claim by those who advocate the necessity of regulation.

First, from an environmental standpoint, human health is more important than industry compliance costs. And, as a nation, our regulatory agencies should never place lives at risk for the simple expediency of lowering the cost of production.

Arguing that a coal plant should be allowed to place the health of the community at risk because cleaner air costs too much is not a sustainable or compelling position.

Second, regulations, though often onerous at some levels, can change health, national security and even influence social costs in a positive way. Consider the federal directive for CAFÉ fleet mileage standards, set at 35.1 mpg by 2016.

This standard will be met by that most consistent American factor, innovation. And while making higher mileage we reduce our reliance on foreign oil and lower the cost of driving for consumers. On every level the nation is better for the regulation.

Unfortunately, when Republicans claim the economy is harmed by regulations they rarely cite specific regulations, suggest alternatives that work, or address the value of regulatory compliance.

The EPA has made our air cleaner and our water safer. Banking regulations may protect us from another melt down, and CAFÉ standards have generated innovative products from America’s auto manufacturers.

Empty rhetoric against sensible regulations is not helping the national debate.

 

Jim Crawford is retired educator and political enthusiast living here in the Tri-State.