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Jeffrey Hollender

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The Harms of Regulation Phobia

Posted: 06/02/11 12:55 PM ET

Safe food. Seatbelts. Safety on the job. Clean air and water. A functioning financial system. These are all things that we as Americans have come to take for granted in our daily lives. And, though it has become unfashionable to say so, these are all things provided by robust federal regulation.

Regulations are getting a bad rap in Washington these days. Despite the collapse of our financial system, financial regulatory reform has been chastised. Despite the continued need for clean air and water, some in Congress are exploring ways to prevent the implementation of rules to stem pollution. And, Rep. Darrell Issa, chairman of the House Committee on Oversight and Government Reform, has devoted his time not to finding ways to reduce the deficit through duplicity in federal agencies, but instead by rallying against any and all regulations that large corporations have suggested they would like to see go.

These misguided efforts distract from dealing with the real issues impacting economic growth. While over-burdensome government regulations may be harmful, those which Congress is currently focusing on will not strangle job creation. This is a myth repeated by politicians and CEOs who stand to increase profits while decreasing safety if standards disappear -- standards that ensure product and food safety, protect our environment, and guarantee the proper regulation of our financial, medical, and legal industries.

Though the Obama administration recently identified thousands of non-functioning, or wasteful rules that are unnecessary and can burden businesses or agencies, responsible reform must leave in place and ensure proper enforcement of the many hard-won regulations that protect the health and safety of Americans.

The anti-regulation mania that's swept Washington conveniently ignores the positive impact that common sense regulations have on all of our daily lives, while threatening to harm the basic protections that we have come to expect. For instance:

  • Attempts to protect the public from salmonella in eggs faced years of roadblocks even after President Clinton proposed an egg safety rule that would have saved 1.4 billion in medical costs and prevented 79,000 illnesses and 30 deaths a year. Heavy lobbying by big agriculture interests delayed implementation of these rules from their inception in 1999 to the final enactment in 2010 -- but not in time to prevent the 2010 salmonella outbreak that left 2,000 Americans sick and led to the recall of half a billion eggs.
  • In 2004, in response to a request, OSHA drafted a rule that addressed the major causes of construction worker injury and death from cranes and derricks (electrocution, collapse and overturning). The final rule established common-sense standards for operator certification, crane inspection, set up and disassembly. But the rule took six years to clear bureaucratic hurdles -- a delay that resulted in an estimated 132 unnecessary deaths and 1,050 preventable injuries at a cost of more than 1 billion.
  • Earlier this year, the House took aim at the Environmental Protection Agency's ability to regulate toxic air pollution. The House bill, designed to "rein in" environmental protection, would block the implementation of the agency's new mercury emissions rules, designed to prevent up to 2,500 premature deaths, 1,500 heart attacks, 17,000 cases of aggravated asthma and 130,000 days of missed work due to illness. This, despite the fact that many of those members who voted to prevent implementation of the rule, voted for it in the Clean Air Act Amendments of 1990.


There are similar stories to be told about industries that affect all areas of American life. Lax regulatory supervision of Massey Energy allowed the company to get away with safety violations that eventually led to a deadly mine collapse in West Virginia. The financial industry's long campaign to escape government checks led to an epidemic of profiteering from reckless practices and an unprecedented economic crisis. The absence of stringent off-shore drilling safety regulations, and enforcement authorities that were missing in action, led to a catastrophic oil spill in the Gulf that will have repercussions for years to come.

The fact is that time and again, the impact of lax regulations is felt more broadly by the country -- from the cost of a near depression to the cost of environmental clean-up. This is not good for most businesses, nor the economy.

In the short run, regulations require investment, but that does not translate into a drag on the economy -- in fact, analyses show that the economic benefits of smart regulation greatly outweigh their costs.

The Office of Management and Budget studied all the major regulations issued between 2001 and 2010, and found that compliance costs of $44 billion to $62 billion were dwarfed in comparison to the $136 billion to $651 billion of annual benefits that those rules created. The OMB in part calculates the economic benefits of regulations by assigning monetary values to the human lives saved. We would like to think that the saving of those lives alone would be reason enough to applaud, rather than scorn, the government's regulatory efforts.

Those investments also create jobs. And, if companies began investing earlier, they would reduce overall costs, benefit from early compliance and be in a position to spread out the cost of regulations over a longer period of time, thus dampening any economic impact.

While Congress engages in ways to prevent implementation of important health and safety regulations, it is sleeping when it comes to identifying real efforts that can jump start the economy, including:

  • Increasing capital access to small business and entrepreneurs to create jobs;
  • Incentivizing new forms of energy, clean transportation and other technologies that will help us lead in the 21st century instead of lagging behind our worldwide competitors;
  • Passing legislation that would encourage greater use of non-toxic chemicals which help save companies compliance dollars, increase worker safety and reduce costs to state and local governments; and
  • Leveling the playing field by precluding companies from escaping their corporate tax obligations by using tax havens outside of the United States.

Too much time has been spent on Capitol Hill arguing over one message or another. When will our elected officials stop the rhetoric, end the charge to implement everything they think their campaign contributors are seeking and start putting Americans first? As supporters and founders of businesses that have proven that we can thrive in a world that encourages a balance in meeting environmental goals, employee goals and profit, we are urging Congress to move away from the lexicon of corporate protection at all costs, and toward the lexicon of protecting the citizens they are supposed to represent.

We must work toward this: real, forward-moving regulatory reform that helps to create a new economy -- one that values people, planet and profit.

David Levine is the co-founder and executive director of the American Sustainable Business Council, a growing coalition of business networks and businesses who represent more than 100,000 businesses and more than 200,000 entrepreneurs, owners, executives, investors and business professionals, advancing a new vision, framework and policies that support a sustainable economy.
Jeffrey Hollender is the co-founder and former CEO of Seventh Generation and the co-founder of the American Sustainable Business Council. He also blogs about these topics and more at JeffreyHollender.com.

 
 
 

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HUFFPOST SUPER USER
Malcolm Hensley
Last of the Reagan Republicans
10:56 PM on 06/02/2011
Life is like a pendulum.

In the 70's 80's and early 90's the EPA I would bet had great approval numbers but as manufacturing jobs disappeared because of trade policies their numbers started to drop.

Then they decided to make a real easy target of themselves by attacking, fossil fuels, climate change and CO2. It doesn't matter if they are right or wrong to many people see their livelihood tied in with cheap energy.

Americans like fair play, if the President was to make a speech saying American CO2, European CO2, or Asian CO2 are all causing environmental problems and we should tax or apply tariffs on all products sold here equally, I believe it would be an easier sale.

We need a paradigm shift in how we are going to handle the future and climate change. Thinking in terms of buying products from Asia with high CO2 footprints while cutting our CO2 footprints here is not going to slow down climate change!

It seems all it does is lower the EPA's approval ratings.

Something to ponder.
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HUFFPOST SUPER USER
Rimser
08:40 PM on 06/02/2011
Does anyone really believe that if the financial regulations that had been in place since the Depression not been repealed that we would have had the financial meltdown we still haven't climbed out of? We used to have a financial system we could more or less count on. If you wanted a home loan, you had to show good faith and put down 20%. You had to prove your income. You had to be able to demonstrate you were responsible enough to pay the money back. The minute they deregulated, all hell broke loose and we'll be picking up the pieces for at least the next generation or more.
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Footwarrior
Progressive Apparatchik
10:09 AM on 06/04/2011
Deregulation allowed the bankers to build a house of cards. The insiders walked away with huge bonuses and left the taxpayers holding the bag. We could prevent this from happening again by putting the regulations back in place. The fact that we haven't assures that the same thing will happen again.
Joel Smithis
Small business owner
04:06 PM on 06/02/2011
Anyone ever saw business regulating itself?

But conservatives believe in that BS!
MThomasNC
Retired, Sassy, Senior Citizen
03:42 PM on 06/02/2011
This whole 'no regulation conservative stand' reveals what a crock of bull talkers they are. Why the dems don't go to bat against them is a mystery to me. Evidence of why regulations are needed is out there and wide spread, but dems take no stand. All we hear is repubs talking about how un-free market regulations are.
We've lived for over 30 years with conservative chipping away regulations. Some of our good democrats have joined forces with them, e.g. Bill Clinton eliminating Glass/Steiger Act. These deregulations have created economic, environmental, climate, food safety chaos for all of us, especially the middle and lower income folks.
Obama talked about getting rid of out dated regulations that do stifle businesses growth. I agree with that so why aren't the WH or congressional dems, especially the senate taking up this cause.
Also, we know why repubs are so dead set against regulations - they want to establish true 'free market' ideology which gives corporations complete control over our society and privatize all govt functions. Fight this, dems. We can't have this private sector monster controlling us.
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HUFFPOST SUPER USER
Ipanemagirl
progressive
01:59 PM on 06/02/2011
why should we allow the biggest [olluters to buy off our politicians and let them protect them instead of regulating them and creating and promoting new energy sources that are less harmful and less expensive once they create a market for themselves. We should be encoraging these things , not stifling them! Subsidies should be reverted to them , instead of to polluters.
Also , why are we allowing the republicns to protect wall street's mischief? Didnt this country and the world suffer enough with the recent ne meltdown to allow stricter regulations to protect the people and investors from another collapse? They shoud have had to submitt themselves to regulations in order to receive a bail out and all their CEOs responsible should have had to sell out and contribute to the bail out and then be fired. What a lousy job we did, thanks to the GOP.
HUFFPOST SUPER USER
Eraser
Reality has a well know liberal bias
01:18 PM on 06/02/2011
Regulations are putting into law what a business should do on its own if it was responsible.

The arguement from conservatives is that they *are* responsible and don't need them. Reality proves otherwise.

Ask yourself the next time someone wants to get rid of regulations, what are they doing wrong that they want to get away with?
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HUFFPOST SUPER USER
Jim Milks
Ecologist
03:30 PM on 06/02/2011
History contains inconvenient examples of the results of "self-regulation" that proponents of self-regulation ignore. Just look at the history of leaded gas, especially the Kehoe rule.
jhNY
Mercy.
12:49 PM on 06/02/2011
"A functioning financial system. These are all things that we as Americans have come to take for granted in our daily lives." That last item cannot be a part of your list, as it does not exist, or if it does, it does only insofar as it functions for a tiny few and disfunctions for the rest of us.
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HUFFPOST SUPER USER
Forrester1
12:31 PM on 06/02/2011
Could not agree more!
Regulations, and regulatory agencies, only came about because of abuses. Government is basically reactive, and it takes a long time at that for most things.
The big problem has been that either Congress failes to properly finance the agency charged with enforcement, or in the case of the GOP, have actively worked over the past 4 decades to gut the enforcement power. Couple this with the industry infiltration and corruption of the agencies and we have set the stage for things like the financial collapse. Another one will come unless we address these issues.

President Obama could begin to reverse some of this if he would restore our civil servants to their positions which were taken away under Reagan.

Here's an example: How long would it take Congress to act if 2 747's were crashing every day in the U.S.? A week?
In 1999, the IOM reported that up to 98,000 Americans were dying every year from being admitted to a healthcare facility. We now know that an additional 100,000 people die every year from infections and "consequences" af being in a healthcare facility. The equivalent of 2 fully loaded 747's crashing every day.
It's 2011, and no data to suggest it has improved.
Oh, that's right, the AHA is the 5th most influential lobbying group. CMMS had to punish JCAHO to start getting anything moveing. JCAHO is an industry "front".
12:06 PM on 06/02/2011
we only have to look at the echoli outbreak in Europe to understand the cost.