Cost and Benefit Analysis

[KeithE]

[Sandy]

The idea that government regulations have "cost jobs" is cliche, but unproveable. There's no objective measurement of such a claim. This is a free market economy, and government regulation, which is part of government's obligation to protect its citizens, is part of the cost of doing business. If you want to do business, and make a profit, you pay the cost. It always sounds great when business owners whine and claim they have to shut down because of government regulation, but that's mostly propaganda.

[ET]

"Serious" CBA? Compared to a CBA argument from left-leaning group that favors regulations and quotes figures from the OMB and an administration that is all about adding to the regulatory burden and which conveniently finds that their regulations are "massively" justified?

I find such a graph with the "benefits" so far outweighing the "costs" to be automatically suspect. The things in this life with such a benefit so far outweighing the cost are slim and none and that leads me to believe some considerations are left out. The regulations in question MAY actually have more benefit than cost, but that graph pegs the B.S. meter in my opinion.

While any given regulation can potentially redirect resources from a job in industry X to a regulatory job, one factor probably left out of this is that when one takes a job from industry X - maybe a car manufacturer - and redirects those resources to complying with a regulation, you have traded a job that creates wealth, goods or services to one that consumes wealth. You may have one less tiny bit of mercury in the air or water, but you've created no wealth for society as a whole.

This principle also applies to folks like teachers, police and firefighters. For all the good they do, they consume wealth and do not produce it. They are necessary to a society for it to function, but I doubt many people think about it when they start getting all warm and fuzzy when politicians talk about hiring that seemingly magical number of "100,000" new teachers/firefighters/police. Pretty much the same for any government function...it consumes wealth and does not create it.

The same is true for the example in your article. It wants to claim that the Chesapeake Bay cleanup will create 35 times more jobs than the Keystone Pipeline, but cleaning up anything does not create any tangible wealth. A pipeline adds infrastructure. It leads to wealth creation by the products that can be transported through it and the associated jobs with maintaining it. Having less trash and pollution in the Chesapeake Bay may be desirable, but it doesn't create any tangible wealth other than the pleasing appearance that may result. It might help if the pollution causes an increase in the fishery in the bay and leads to the ability to harvest more fish and such, I suppose. Possibly some health benefits, but I am always dubious of these "health benefits" claims because they are so subjective and difficult to measure and the variables to health are so numerous.

But more to your point, I found this old article from The Heritage Foundation: ...which points out some of the faults in how government agencies can compute costs...things they leave out, etc. Or a similar article here that takes issue with government measurements: .

I find it ludicrous that your friends over at thinkprogress want to claim that additional regulations and taxes have little effect on mom-and-pop businesses. Instead of asking vague questions about the topics, I suggest they ask mom and pop if raising the minimum wage from $7.25 t o $9.25 or $9.50 will significantly impact their business and their ability to hire or retain the employees they have. Then get back to me. If regulatory costs and taxes don't significantly impact small business and mom-and-pop, as the thinkprogress folks want to claim, then why are small businesses exempt from providing insurance under Obamacare? Why are so many companies seeking waivers?

I think most of their arguments don't pass the "smell test".

[KeithE]

[Haruo]