Ezra Klein shares a graph he says explains the regulatory burden:
This graph strikes me as mis-titled. For one, a decade-long shift of about a tenth of a percent relative to private-sector employment doesn't strike me as a massive increase in anything. Secondly, as Ezra notes, a lot of the recent change likely has to do with the plunge in private employment during the recession. Equally undermining the title is that Ezra and Michael Mandel, who originally posted the graph, note that most of these new regulators are Homeland Security- and TSA-related, not dealing with business. Regulators specifically dealing with businesses have increased by one one-hundredth of 1 percent between 2000 and 2009, which is not all that much at all.
Numbers aside, the massive assumption underlying all of this is that more regulators equal more burden on business. But what if more regulators mean more productive agencies -- paperwork is done faster and inspections take less time? That would imply that the regulatory burden on businesses has been reduced by all these new employees at regulatory agencies.
Meanwhile, we've recently seen a number of major regulatory failures, from tainted food to tainted consumer products. On the financial front, we've seen regulators terribly undermanned compared to the organizations they supervise. For example, the Commodities Futures Trading Commission has 122 employees working on enforcement, the lowest level since 1984, compared to thousands and thousands of financial-sector workers in the same industry. That doesn't suggest to me that our key economic problem is too many regulators.
I'm not averse to arguments that the costs of regulation can, in certain instances, exceed their benefits and become detrimental to economic growth. The above graph just isn't how you measure those costs.
-- Tim Fernholz
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