Those familiar with the "confidence fairy" recognize that economic policy debates in Washington are dominated by imaginary creatures. The confidence fairy, which was discovered by Paul Krugman, is the mythical creature that brings investment, jobs and growth as a reward to countries that practice painful austerity.
Economies don't actually work this way, but important people in policy making positions in Washington and Europe insist that they do. And they hope that they can get the public to believe in the confidence fairy, or at least a large enough segment of the public, to stay in power.
In this same vein, Mitt Romney and the Republicans are trying hard to promote the belief in the "regulation monster." The regulation monster is composed of the mounds of bureaucratic paperwork and red tape that strangles businesses. As a result of the regulatory monster, America's businesses aren't able to be the job creators that they want to be.
There are a few problems with this story. First and foremost, all the data show that businesses are doing just great. The profit share of GDP is near its 50-year high. The after-tax profit share is at a 50-year high since the tax share of profits is down considerably from its levels in the '50s and '60s. This means that when we look at the economy as a whole, the regulation monster has not left any tracks.
Suppose we look at specific industries. Governor Romney and the Republicans say the President Obama's regulations on oil and gas drilling having stifled the development of domestic energy sources. This should tell us exactly where to look for the regulation monster.
Last week, New York Times reporter Jonathan Weisman went to western Pennsylvania, the middle of the Marecellus Shale, in search of the regulation monster. This should be one of the places where the monster is most visible because this is the center of the fracking industry.
Fracking is the relatively new and controversial process of extracting gas from deep underground shale formations. Many scientists and environmentalists have raised concern about environment risks from fracking as highlighted in the film Gasland. Surely the regulation monster must be lurking in this region preventing gas companies from creating jobs and producing domestic energy.
Remarkably, Weisman found no evidence whatsoever of the regulation monster. The people in the area said that the industry was able to do pretty much whatever it wanted. Many expressed serious concerns about the damage to their land and their drinking water.
The data are consistent with the industry's free reign. There has been a boom in gas production during Obama's administration, pushing prices down by almost 50 percent from when he took office. These low prices are now causing gas companies to curtail production, not the regulation monster.
The other obvious place where the Republicans' rhetoric would imply that the regulation monster is lurking is in President Obama's health insurance law. Romney and the Republicans have claimed that the laws mandates have impeded business hiring.
There is an obvious way to test this claim. The law only imposes mandates on firms that hire more than 50 workers. Smaller firms that employ 20-30 people would not be affected by the mandate, nor would larger firms that already provide health insurance for their workers. This means that if Obamacare prevented firms from hiring, the impact should be concentrated among mid-size firms (near or over the 50 worker cutoff) who don't currently provide insurance for their workers.
If the weakness in job growth is concentrated among this group of firms, no one has produced evidence for this fact. The data from the Bureau of Labor Statistics show weak job growth in firms of all sizes. This is consistent with the story that the economy suffers from weak demand. It does not provide evidence of the regulation monster.
The fact that Republican claims of massive regulatory burdens are so out of line with reality should be a cause of ridicule. The media should be pressing them to produce some evidence to back up what they are saying. After all, the public has a right to know whether the people running for or holding office are completely out touch with reality.
With rare exceptions, like Weisman's article in the NYT, the media don't bother to tell their audience when candidates are making assertions that are utter nonsense. As a result, we can expect to have an election in which at least one party is basing its economic agenda on the confidence fairy and the regulation monster.
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Bill Chameides: Fracking in Pennsylvania: A Boom That's Fizzling?
'By BOB BARR | 1/13/12 4:32 AM EST
'While the American electorate and media were focused on the Iowa caucuses at year’s end, and are now fixated on the early presidential primaries, a serious — potentially devastating — problem is brewing that could affect every driver and other users of refined petroleum products in the U.S.
'The warning signs came in late 2011, when two major oil companies — Sunoco and ConocoPhilips — announced that they were closing three oil refineries in the Northeast. This means the loss of more than 50 percent of the refining capacity in that region.
'Some union officials and Democratic lawmakers, like Rep. Edward Markey (D-Mass.), predictably blamed the closures on the oil companies’ desire to “put profits ahead of the people.” But the reality is that the closures are just the latest evidence of the far-reaching effects of over-regulation on the petroleum refining industry.
'This industry, already one of the most highly regulated in the country, has been struggling for years to maintain minimal profit margins — even as it faces the prospect of the Environmental Protection Agency’s more burdensome carbon-emission regulations.
-- http://www.politico.com/news/stories/0112/71396.html#ixzz1yyJ2tdbc
Look harder Mr Weisman:
'Over-regulation of the Nation’s Refineries
'American refineries are closing and more closures are likely, often because of overly-burdensome regulation as well as lower gasoline demand. Several refineries in Pennsylvania are idle and possibly closing if no buyers come forward. The refining industry is one of the most highly regulated in the country and has been struggling for years to maintain minimal profit margins. In the face of even more regulations from the Environmental Protection Agency (EPA), who are, imposing carbon-emission regulations as well as proposing overly-strict ozone regulations and other regulations, more closures are likely. Not only do EPA’s federal standards impose burdens on the industry, but state and local regulators are also part of the problem.'
-- http://www.instituteforenergyresearch.org/2012/05/03/over-regulation-of-the-nations-refineries/#_edn1
Obama’s red tape parade marches over small business'
'By Ed Feulner
'The Washington Times Monday, February 20, 2012
'We keep hearing that the economy is in a “jobless recovery.” What’s holding American companies back? Why aren’t they hiring more people?
'High taxes draw a lot of attention, and rightly so. They depress investment and discourage innovation. But escalating regulatory costs also undermine our economy. And small businesses, which fuel so much economic growth and hire so many people, often wind up particularly hard-hit by them.
'You don’t have to be a doctrinaire conservative to realize this. The Economist, the London-based news weekly - and a supporter of President Obama’s candidacy in 2008 - highlights the problem in its latest cover story, “Overregulated America.” They note the irony: “The home of laissez-faire is being suffocated by excessive and badly written regulation.”
'Mr. Obama also has emphasized the problem. The “rules have gotten out of balance,” he said in a speech last year, resulting in “a chilling effect on growth and jobs.” When the National Federation of Independent Businesses asked small-business owners in December to name their single biggest problem, 19 percent cited regulations and red tape - up from 15 percent a year ago. That’s more than any other category except for “poor sales.”'
-- http://www.washingtontimes.com/news/2012/feb/20/onerous-effects-of-overregulation/
The R's love the subservient press lap-dog they have in Faux News, in large part because FN doesn't hinder the right-wingers' style and challenge anything they say.
Frankly, it's past the time for the media to stop giving a pass to the right-wing in the name of impartiality. The press should put ANYBODY's feet to the fire. Left, or Right, Liberal or Conservative, Christian, Muslim, Jewish, agnostic, whatever.
What the Right forgets is the follow-up to getting people to believe whatever you say, even if it's a lie; that is, when they finally do figure out the lie, people will stop believing ANYTHING that is said by the liars Happened with the Soviets. Happened in the French Revolution. Will happen to the Republicans.
The conservative when in power, sabotage the democracy deliberately. Remember their plan included starving the "beast" , choking it works too. Drowning it in tub. That's what conservatives want to do to your Republic, the USA, and you vote for them?
Vote for the Locke liberal founders type Kucinich, Warren, Grayson CPC-progressives and the dems in the general. And Obama, duh.
His ACA paradigm is missing some key elements that would shoot it down- the mandate won't go into effect until 2014 so of course we're not going to see any notable effect now. And businesses on the 50 cusp (to increase to 100 in 2016) who don't offer a qualified health plan will also be affected. Many businesses with high deductible health plans will face the same fate as if they offered no coverage at all. These businesses with employees numbered in the high 40's will face whopping and immediate consequences should they cross the 50 threshhold. If ACA losses outweigh the gains they'd see with a couple extra employees they'll hold off until market conditions justify the additional hires.
Not that I'm opposed to sensible regulation. Fracking is a concern of mine. If it's polluting our ground water of course it should be regulated accordingly. But Baker's argument that government regulations are basically a nonissue across the board is based on faulty logic.
CMS requires the same certification be done for each carrier we're appointed with in addition to AHIP certification which masks the prior certs. It's all the same information over and over and over. Gotta be extra certified I guess.
CMS requires we send an appointment request to clients who call in asking for an appointment. No joke. The signed request must then be mailed back to us before said appointment can take place. Not only time consuming but it confuses the clients we're trying to serve.
The state requires my clients verify eligibility every year. These are the same businesses making payroll deposits and filing 132s quarterly. Guess what they must produce to establish eligibility and who has to hunt it down.
There's plenty more and it's all easily blown off if you don't have to deal with it. For me and my clients it's time and money we didn't have to spend just a few years back.
http://blogdredd.blogspot.com/2011/12/blind-willie-mctell-news.html
Again, believe Mr. Baker if he's telling you what you want to hear. And discount everything I've said based on my direct observations and experience. Otherwise, consider the article to be a complete crock.
I think, to level the playing field, goods manufactured and imported into this country should be required to be done so under regulations similar to those in this country. After all, the air polluted elsewhere will eventually end up here and everywhere else.
BTY - where are the jobs the Bush tax breaks have created? And you still haven't documented any great job loss due to over regulation - just the same old charge that over regulation costs jobs.
As for Bush, he was -- fiscally and economically -- a mostly liberal Republican in the Rockefeller vein. He teed off liberals only because of his social conservatism, which had few real public policy impacts. Believe me, I have my own gripes about Bush I and II!
Credit rating agencies had incentives, from incestuous relations with the banks, to give false ratings. That, again, is the opposite of the job they were supposed to do. That is not crony capitalism, that is anti-capitalism.
And there's so much more. Surely you see that capitalism needs good regulations to remain capitalism. The evidence is not overwhelming, its over.
Bad regulations should be amended or deleted. But they are not the driving force of the weak economy. Again it was the dissolution of good regulations that caused the disaster. Oh, and I have run businesses for the last twenty years, but it is my common sense as a passenger on this ailing ship of a country that leads me to my conclusions.
The marketplace of information in our country is already heavily tilted in favor of spin by monied interests rather in favor of objective analytical assesssments. FOX has played a major role in degrading the caliber and rationality of political discourse. Organizations like Karl Rove's Crossroads threaten to make things much worse.
There is virtually no industry in America that operates without rules and "freedom" is never absolute as many people like to believe.
A strong well run company will still be the eventual winner, and that my friend is sustainable capitalism.
The only legitimate uses for something like the Consumer Protection Bureau is keeping these companies honest to the terms of their contracts and preventing fraud against consumers. If they stick to that then more power to them but everything I've seen so far leads me to believe that they're itching to cap interest rates and "protect" the people who made/make mistakes but don't want to pay for them.
An organized society is what allow personal liberty.