With his recent executive order, President Trump now purports to require regulatory agencies to (1) identify two existing regulations for elimination for any new one they would propose and (2) ensure that for fiscal year 2017 the incremental economic effect of adopting the new regulation does not exceed zero. With this one stroke of a pen, President Trump not only continues to ignore science, but now adds technology and economics to the mix in a constitutionally questionable action.
Copious scientific research, not to mention visible, on-the-ground impacts on people and communities, provide clear evidence of the serious threats we face as a nation and a planet - and the urgent need for protective action. By now, this is not news. And regulation is a critical tool in the action toolbox.
The unfounded assertions that regulation inhibits innovation and technology - and kills jobs - are also not new. These assertions about regulation make nice sound bites, but they are without foundation. They are wrong-headed and lead to self-defeating policies, such as this one. The work of MIT's School of Engineering in the late 1970's and the work of Michael Porter at the Harvard Business School in the early 1990's have shown that regulation actually stimulates innovation. And even President Trump believes that innovation is an important determinant of new employment.
Where has regulation stimulated innovation with the added benefit of public protection? Well, how about the regulation that phased out lead in gasoline? Or that caused PCBs to be replaced by safer and better transformer fluids? How about ozone-layer killing CFC's now being replaced by more ecosystem-friendly refrigerants? Automobile emissions standards resulting in more fuel efficient cars? The growth of economically-competitive renewable energy sources in the wake of renewable energy standards? The reduction in worker asbestos disease as a result of safer substitutes? All of these examples point to the folly of abandoning regulation as a means of stimulating technology and employment.
Which life-saving and climate-improving regulation already in place would Mr. Trump have agencies eliminate when another health, safety, or environmental protection is needed? Is this a realistic or sensible requirement?
Of course, regulation does hurt some producers, users, and businesses. But new business entrants with substitute technologies and innovative approaches do emerge, creating new markets and employment opportunities. If we take into account the positive economic effects of the new business entrants, the reduction of health, safety, and environment devastation and consequential economic costs, and the economic benefits that accrue from regulations that protect public health, safety, and the environment, the incremental effect on the entire economy is significantly positive. More often than not, however, it is only costs to incumbent producers, users, and businesses that enter into the cost calculus. And too often, the societal benefits of regulation are inadequately accounted for. The Office of Management and Budget (OMB) in the Executive Branch is supposed to be the watchdog of the impact of new regulations on society - considering both their benefits and costs.
But watchful vigilance is needed. Pandering to predictable business laments about regulation is not in the public interest. And many firms rely on the certainty and opportunity that regulations provide their operations.
Moreover, the President's Executive Order is likely unconstitutional. Congress has the sole power to legislate, and it has delegated the responsibility to issue and withdraw rules and regulations to regulatory agencies through a well-defined process described in the agencies' enabling legislation, such as the Clean Air Act. The President cannot usurp that authority.