Regulation

[creekster]

Liberal: The systemic failures evident in the recent financial crisis demonstrate the need for some regulation in finance.

Conservative: No! The mere specter of regulation is enough to scare business away from investing. Liberals discussing new regulation is the cause of the worsening economic crisis. The financial industry is like a very shy woman who needs to be sweet-talked and tenderly touched. Only then will she open up and bare her precious gifts. Talk about regulation is like suggesting filthy lascivious acts. She isn't that kind of girl.

WIthout being coy, where have you seen the deabte framed in these terms?

[GrizzledVeteran]

So I understand my ignorance on the matter, and generally stay out of the debate, except in those most general terms. What I don't understand is how so many equally ignorant people on the Right accept the idea that regulation is what is killing business. What regulations are those? How have you determined that a particular regulation has tipped on the scales from being a genuine benefit and protection to being something onerous and unnecessary? How do you know that you aren't simply letting some squeaky wheel whose interests are not aligned with health and life to dictate your policy positions?

1. Regulation significantly increases expense budgets, which limits growth, which limits hiring, etc.

2. Regulation retards or outright prevents innovation, which limits growth, which limits hiring, etc.

3. Regulation forces companies to be over-capitalized

4. Regulation is a serious roadblock to efficiency

5. Regulation is nearly always a grossly disproportionate response to perceived abuses in the marketplace

[Katy Lied]

1. Regulation significantly increases expense budgets, which limits growth, which limits hiring, etc.

2. Regulation retards or outright prevents innovation, which limits growth, which limits hiring, etc.

3. Regulation forces companies to be over-capitalized

4. Regulation is a serious roadblock to efficiency

5. Regulation is nearly always a grossly disproportionate response to perceived abuses in the marketplace

The neoclassical economic explanation, and from the perspective of existing economic participants.

[U-Ute]

How do you know they are wrong?

Because most polls show that the problem right now is a lack of demand, not onerous regulations.

http://online.wsj.com/article/SB1000...063763332.html

As I keep saying, the middle class that fueled the boom of the mid-90's to the mid-aughts did it on credit cards and HELOCs, not on rising wages.

Until the middle class feels confident that they will have enough money to pay their mortgage and healthcare costs, things won't change.

[RobinFinderson]

WIthout being coy, where have you seen the deabte framed in these terms?

http://www.thedailyshow.com/watch/thu-september-22-2011/jennifer-granholm?xrs=share_copy

[creekster]

Because most polls show that the problem right now is a lack of demand, not onerous regulations.

http://online.wsj.com/article/SB1000...063763332.html

As I keep saying, the middle class that fueled the boom of the mid-90's to the mid-aughts did it on credit cards and HELOCs, not on rising wages.

Until the middle class feels confident that they will have enough money to pay their mortgage and healthcare costs, things won't change.

I think this confuses issues.

First, RF asked about the process. Although we are going beyond that here.

Second, the poll compares the uncertainty of potential regulation compared to the lack of demand as a factor in creating jobs. This is an interesting poll, but it is inconsistent with my own anecdotal evidence obtained from talking to my clients and from a presentation I heard by a Hoover economist this week.

Third, it ignores the cost of current regulations (and I dislike speaking so broadly, but you get the idea) which increase the cost of job creation. Lowering the cost of job creation also lowers the demand required to add a worker. Moreover, questioning whether regulations hinder job creation is independent of trying to learn what fueled the prior upswing. No one wants the same boom again; they just want more jobs.

[RobinFinderson]

1. Regulation significantly increases expense budgets, which limits growth, which limits hiring, etc.

2. Regulation retards or outright prevents innovation, which limits growth, which limits hiring, etc.

3. Regulation forces companies to be over-capitalized

4. Regulation is a serious roadblock to efficiency

5. Regulation is nearly always a grossly disproportionate response to perceived abuses in the marketplace

The problem I see with this line of reasoning is that it never considers WHAT the regulation is. Consider the regulation that prevents solid waste disposal in the Pacific Ocean. I would like to start a waste disposal business. I will collect waste, and I will either burn it or dump it in the ocean. I will spend almost 100% of my money on hiring people to collect and dump/burn waste. But wait! Regulation is going to divert some of that money from hiring to other tasks, like removing mercury-laden trash before I throw it in the incinerator. Removing the mercury from the trash before I burn it costs $$$$. And how about my plan to dump the trash in the ocean? What, I can't do that? But I would save SO MUCH MONEY and I could hire so many more people if I could only dump it in the ocean.

The point: Anyone who says that regulation, generally speaking, is a bad thing, before they actually ask any questions about what the regulation is, comes across as a stooge.

[Katy Lied]

The problem I see with this line of reasoning is that it never considers WHAT the regulation is. Consider the regulation that prevents solid waste disposal in the Pacific Ocean. I would like to start a waste disposal business. I will collect waste, and I will either burn it or dump it in the ocean. I will spend almost 100% of my money on hiring people to collect and dump/burn waste. But wait! Regulation is going to divert some of that money from hiring to other tasks, like removing mercury-laden trash before I throw it in the incinerator. Removing the mercury from the trash before I burn it costs $$$$. And how about my plan to dump the trash in the ocean? What, I can't do that? But I would save SO MUCH MONEY and I could hire so many more people if I could only dump it in the ocean.

The point: Anyone who says that regulation, generally speaking, is a bad thing, before they actually ask any questions about what the regulation actually is, comes across as a stooge.

Try this example:

You have an existing garbage disposal business, and you dump mercury laden solid waste into the ocean. Your costs include labor, space rental at the Santa Monica pier where you dump, trucks to transport the waste to the Pier, and gas for the trucks.

Now regulation is passed, and you can no longer dump mercury at the Pier into the ocean. You stop paying your Santa Monica Pier rent and instead hire a fisherman with a boat to truck the waste beyond the 100 mile US boundary, where you can dump all you want. The Santa Monica Pier Corporation loses revenue, but Joe's Fishing Boat gains revenue, and Joe hires 2 more fisherman to drive his boats.

The winner and loser changes from the Pier operator to the boat operator.

If it cost more to ferry the waste out to sea, you will complain bitterly that your costs have gone up. And the neoclassical model only takes into consideration existing economic concerns, so your feelings matter. But other people (like the Fisherman) enter the market, and these new market entrants can more nimbly navigate the regulatory waters.

Note: This scenario says nothing about the common good, or the benefit of mercury free waters to society. In fact, the mercury probably floats back to shore, so nothing is accomplished. Much regulation does not accomplish the public good that it attempts to mitigate.

Rather than make a subjective judgement about all regulation per se, it's more efficient to think of regulation as a tool that changes the playing field. I know it's not powerful to admit to having to analyze any regulatory decision on a case-by-case basis, but it's silly to try to characterize regulation as a policy tool in a vacuum.

[cowboy]

Regulations increase the cost of production. Price seeks the cost of production. Demand is inverse to price. Hence, regulation may decrease demand.

Do we need regulations? Of course. Appropriate regulation protects the public and ensures fair competition, both of which are good things. The problem arises when lawmakers and policy makers use regulation to serve themselves, their interests, or their constituents. This happens much more often than it should.

Robin, your example of dumping trash in the ocean is asinine, but it perfectly depicts the problem surrounding regulation debate. Nobody but the garbage business would argue that dumping trash in the ocean is a good thing, but the left paints the right as anti-any regualation, when that simply is not the case. The left does its best to portray the right as people who want to destroy the environment and let big business run roughshod over poor laborers and innocent consumers.

The right isn't arguing about the necessary regulations. Rather, the regulations that force substantial costs on companies for what appears to be little marginal benefit to the public that raise concerns from the right. Sarbanse-Oxley, Dodd-Frank, Obamacare, etc. have been or will become enormously expensive, and the question is simply this: Are the benefits worth the costs? Unfortunately, when it comes to anything Congress does, the answer is 'no' much more often than it should be.

And it's not just Congress. Policies and regulations coming from the Executive Branch are just as, disturbing. The exasperating thing is that they are often even counterproductive. Take wind energy, for example. The administration has taken a firm position that they want more wind energy, but they aren't getting it - any guesses why? Because we haven't enough transmission lines from the West and Midwest where we have all the wind. Why not build more transmission lines, you ask? Well, because the red tape associated with putting a post hole for a power line on a place where, heaven forbid, we may disturb a sage grouse is so onerous that putting a line across public lands is now a 15-year application process full of red tape and bureaucracy, if it is even possible at all.

Regulation isn't the problem. Enacting regulation before doing an honest cost-benefit analysis on them is.

[wuapinmon]

Here's a regulation that impacts me and I don't like it at all.

(1) COLLEGE TEXTBOOK PRICING INFORMATION- When a publisher provides a faculty member or other person or adopting entity in charge of selecting course materials at an institution of higher education receiving Federal financial assistance with information regarding a college textbook or supplemental material, the publisher shall include, with any such information and in writing (which may include electronic communications), the following:
‘(A) The price at which the publisher would make the college textbook or supplemental material available to the bookstore on the campus of, or otherwise associated with, such institution of higher education and, if available, the price at which the publisher makes the college textbook or supplemental material available to the public.
‘(B) The copyright dates of the three previous editions of such college textbook, if any.
‘(C) A description of the substantial content revisions made between the current edition of the college textbook or supplemental material and the previous edition, if any.
‘(D)(i) Whether the college textbook or supplemental material is available in any other format, including paperback and unbound; and
‘(ii) for each other format of the college textbook or supplemental material, the price at which the publisher would make the college textbook or supplemental material in the other format available to the bookstore on the campus of, or otherwise associated with, such institution of higher education and, if available, the price at which the publisher makes such other format of the college textbook or supplemental material available to the public.
‘(2) UNBUNDLING OF COLLEGE TEXTBOOKS FROM SUPPLEMENTAL MATERIALS- A publisher that sells a college textbook and any supplemental material accompanying such college textbook as a single bundle shall also make available the college textbook and each supplemental material as separate and unbundled items, each separately priced.
‘(3) CUSTOM TEXTBOOKS- To the maximum extent practicable, a publisher shall provide the information required under this subsection with respect to the development and provision of custom textbooks.
‘(d) Provision of ISBN College Textbook Information in Course Schedules- To the maximum extent practicable, each institution of higher education receiving Federal financial assistance shall--
‘(1) disclose, on the institution’s Internet course schedule and in a manner of the institution’s choosing, the International Standard Book Number and retail price information of required and recommended college textbooks and supplemental materials for each course listed in the institution’s course schedule used for preregistration and registration purposes, except that--
‘(A) if the International Standard Book Number is not available for such college textbook or supplemental material, then the institution shall include in the Internet course schedule the author, title, publisher, and copyright date for such college textbook or supplemental material; and
‘(B) if the institution determines that the disclosure of the information described in this subsection is not practicable for a college textbook or supplemental material, then the institution shall so indicate by placing the designation ‘To Be Determined’ in lieu of the information required under this subsection; and
‘(2) if applicable, include on the institution’s written course schedule a notice that textbook information is available on the institution’s Internet course schedule, and the Internet address for such schedule.
‘(e) Availability of Information for College Bookstores- An institution of higher education receiving Federal financial assistance shall make available to a college bookstore that is operated by, or in a contractual relationship or otherwise affiliated with, the institution, as soon as is practicable upon the request of such college bookstore, the most accurate information available regarding--
‘(1) the institution’s course schedule for the subsequent academic period; and
‘(2) for each course or class offered by the institution for the subsequent academic period--
‘(A) the information required by subsection (d)(1) for each college textbook or supplemental material required or recommended for such course or class;
‘(B) the number of students enrolled in such course or class; and
‘(C) the maximum student enrollment for such course or class.
‘(f) Additional Information- An institution disclosing the information required by subsection (d)(1) is encouraged to disseminate to students information regarding--
‘(1) available institutional programs for renting textbooks or for purchasing used textbooks;
‘(2) available institutional guaranteed textbook buy-back programs;
‘(3) available institutional alternative content delivery programs; or
‘(4) other available institutional cost-saving strategies.

[Flystripper]

Personally, i'm a fan of regulation.

[YOUTUBE]1plPyJdXKIY[/YOUTUBE]

RIP Nate D-OH-double-G

[RobinFinderson]

Robin, your example of dumping trash in the ocean is asinine, but it perfectly depicts the problem surrounding regulation debate. Nobody but the garbage business would argue that dumping trash in the ocean is a good thing, but the left paints the right as anti-any regualation, when that simply is not the case. The left does its best to portray the right as people who want to destroy the environment and let big business run roughshod over poor laborers and innocent consumers.

Who are these people on the right fighting for sensible regulation? There are plenty, even in this thread, who argue in principle, against regulation. That is also the tone of the GOP candidate debates. The 'asinine' garbage dumping regulation is just a starting point when talking to someone like GrizzledVeteran, who argues against 'regulation.' Once we can agree that there should be regulation designed to curb dumping waste into the ocean, then maybe we can start talking about the difference between that, and limitations on the amount of sulfuric acid that can be released in plant emissions. It is the same concept, yet we often hear the GOP argue that the EPA is a problem, without ever hearing about how they would regulate the release of toxins into our air.

[cowboy]

Who are these people on the right fighting for sensible regulation? There are plenty, even in this thread, who argue in principle, against regulation. That is also the tone of the GOP candidate debates. The 'asinine' garbage dumping regulation is just a starting point when talking to someone like GrizzledVeteran, who argues against 'regulation.' Once we can agree that there should be regulation designed to curb dumping waste into the ocean, then maybe we can start talking about the difference between that, and limitations on the amount of sulfuric acid that can be released in plant emissions. It is the same concept, yet we often hear the GOP argue that the EPA is a problem, without ever hearing about how they would regulate the release of toxins into our air.

The better question is who are these people on the right that are fighting to get rid of all regulations? In typical partisan fashion, you even overstate the right in this thread by saying there are "plenty, even in this thread, who argue in principle against regulation." That's certainly not how I read this thread. GrizzledVeteran is the only poster whose position could even come close to your interpretation, and his argument speaks more to the way regulations are written and enacted than to the need for regulation.

You, like most of the folks with your ideological leanings, conclude that, since the GOP argue that the EPA is the problem, the GOP must believe that polluters should be unregulated, ergo, the GOP wants to pollute the air and water. Just because the right has a problem with the way the EPA regulates does not in any way that they believe regulations should not exist.

Yes, regulation to some degree is necessary to protect the public, and I doubt any honest-minded person on the right will disagree. But all regulation has a cost, and ultimately that cost is passed to the public. The problem that I see is that the cost of many regulations exceeds their benefit to the public. Politicians are notorious for over-reacting to any crisis and enacting onerous legislation that wouldn't have prevented the initial crisis in the first place (See Sarbanse-Oxley). Meanwhile, regulation has become a way for both parties to reward their supporters by stifling competition, while agencies have a history of enacting regulation upon regulation in an effort to justify their existence. These are the problems I see - not that regulation is bad, but that the regulatory process has become a way for people to serve themselves instead of the public.

[RobinFinderson]

The better question is who are these people on the right that are fighting to get rid of all regulations? In typical partisan fashion, you even overstate the right in this thread by saying there are "plenty, even in this thread, who argue in principle against regulation." That's certainly not how I read this thread. GrizzledVeteran is the only poster whose position could even come close to your interpretation, and his argument speaks more to the way regulations are written and enacted than to the need for regulation.

When my original post essentially said, "I don't follow regulation closely enough to argue either for or against it, but it seems like there are people on the right who are against all regulation just in principle... how can a reasonable person be against 'regulation' in general?,' byu71 turned around and started talking about my 'lack of knowledge' when it comes to business. I grant you that 71's response was a nonsequiter, but his tone seemed to make his point -- you don't understand business, because if you did, you would not support regulation. I included 71, with GV, in my tally.

You, like most of the folks with your ideological leanings, conclude that, since the GOP argue that the EPA is the problem, the GOP must believe that polluters should be unregulated, ergo, the GOP wants to pollute the air and water. Just because the right has a problem with the way the EPA regulates does not in any way that they believe regulations should not exist.

The GOP's problem with the EPA is a good example of a generalized attack on regulation. The EPA is like a 'police force' for enforcing federal and state environment protections. They don't invent the laws. They enforce them. So what does it say about the GOP when they make generalized attacks against the environmental 'police department?'

Yes, regulation to some degree is necessary to protect the public, and I doubt any honest-minded person on the right will disagree. But all regulation has a cost, and ultimately that cost is passed to the public. The problem that I see is that the cost of many regulations exceeds their benefit to the public.

I'm all for doing cost-benefit analysis, so long as it isn't just a stalling tactic to avoid needful regulation.

Politicians are notorious for over-reacting to any crisis and enacting onerous legislation that wouldn't have prevented the initial crisis in the first place (See Sarbanse-Oxley). Meanwhile, regulation has become a way for both parties to reward their supporters by stifling competition, while agencies have a history of enacting regulation upon regulation in an effort to justify their existence. These are the problems I see - not that regulation is bad, but that the regulatory process has become a way for people to serve themselves instead of the public.

I'm in complete agreement with everything you write in this last paragraph. But this is a complaint about our government in general, and not regulation in particular. I think our government has become captive to private interests, and it will use all of the tools at its disposal, including regulation, to reward the big donors.

[cowboy]

The GOP's problem with the EPA is a good example of a generalized attack on regulation. The EPA is like a 'police force' for enforcing federal and state environment protections. They don't invent the laws. They enforce them. So what does it say about the GOP when they make generalized attacks against the environmental 'police department?'

I disagree. The EPA writes rules all the time that dictate how they will enforce legislation, and these rules give them great latitude in enforcement to the point that the rules themselves become regulatory. Take the Clean Air Act, for example. Under the Clean Air Act, the EPA has authority to regulate companies to keep them from polluting, but the definition and extent of pollution are determined by the agency. Hence, the EPA decides how to limit CO2 emissions, which it has taken upon itself to categorize as a pollutant, including who can emit CO2 and to what extent it can be emitted.

I think you and I have found common ground on everything else.