To put things in the current fashion of free market terminology, Federal regulations are produced when market forces have somehow failed. This includes both the economic market and the political market of votes. Regulations are either good or bad. Sometimes when they are instituted, one does not know what all of the downstream effects will be. If regulations create new problems or if they turn out to be inadequate, they need to be repealed, but if the original problems that created them in the first place still exist, they also need to be replaced.
President Trump seems to be a fan of deregulation. Almost all of the important appointments that he has made and all of the important laws he has signed so far or the Executive Orders he has produced support deregulation. Looking only at his actions rather than his words, he gives the appearance of a person who, like many, think of deregulation as such as a political philosophy. It is clear that among Republicans, there are so-called small government people who seem to be against regulations in general, as though regulations are anti-freedom in principle and as though regulations somehow simply spring arbitrarily from an ever encroaching government.
It is true that regulations restrict freedom, but they restrict the freedom of those who support the market failures that engender them, since those market failure work to their personal advantage. While there is a good case to be made that we need to be prudent in enacting regulations and that because of their restrictive nature they should be reviewed frequently, being against regulations as such is a lazy political position.
When we look at groups trying to kill regulations, we should look at why the regulations were made in the first place and who it would benefit if they were killed. There is no doubt that regulations increase the costs of doing most things. Businesses that want deregulation are entirely correct in pointing out that deregulation is cheaper than regulation for them. Expect to see the argument that regulations impost costs that restrict investment and job creation to be used more and more now that President Trump has established this meme as the rock around which various groups build their deregulatory arguments.
One such group, a very powerful business group called the Business Roundtable, about a week ago submitted to the president a deregulatory wish list. There are 22 items on it (hence the title of this article). There are 16 proposals for killing specific regulations and 6 proposals for improving the regulatory process as such. This list, insofar as it has been reviewed on the Left has been mocked. I myself found the 6 regulatory process improvement ideas to be rather sound. And I have to say that I admired the composition of the supporting letter in that it simultaneously promotes the killing of specific regulations but also distances itself from this promotion by more or less saying "just thinking out loud here."
You can review the list yourself. But I want to look at a few of the proposals to remind you that mixed in with the good and ongoing job of reviewing and improving regulations are some really nasty, self-serving things.
The first, but not the worst, is a request to repeal the regulation requiring corporations to publish the ratios between the CEO salary and the wage of the average worker. This, because:
The pay ratio rule, which requires chief executives to certify what is an arbitrary and often meaningless number, provides no material information to shareholders or investors.
This regulation must really have gotten under the CEO's skins and one wonders if there might be the lingering sparks of conscience lurking there. I suppose one might say that if this this disclosure is not helpful to shareholders, then one would rather see the shareholders complaining about this rather than the outed executives. But the regulation is important because it is also information that his useful to the general public. The growing wage disparity is a national political issue, not just an intimate little family issue between shareholders and the C-Suite.
The second is a request to repeal the Fair Pay and Safe Workplaces Executive Order (EO 13673). The request claims that this Executive Order will cost businesses $474 million and speaks to the idea that it will cause a lot of bogus actions by workers against their companies. If you are not familiar with this law, the Department of Labor describes it in this way:
While the vast majority of federal contractors play by the rules, every year tens of thousands of American workers are unlawfully denied overtime wages, discriminated against in hiring or pay, put in physical danger on the job, or otherwise denied basic workplace protections by the federal contractors who employ them using taxpayer dollars. Taxpayer dollars should not reward companies that break the law, and federal agencies risk poor performance by awarding contracts to companies with a history of labor law violations. Responsible contractors who meet their legal responsibilities should not have to compete with those who offer low-ball bids based on savings from skirting the law.
While the executive order might lead to bogus claims, it will also lead to legitimate claims as well. Business will happily throw this baby out with the bathwater. While everyone has a right to sue, most people can't afford to sue, something that the people exploiting them absolutely count on (and something that businessman Trump often counted on). Regulations like this one give the people who can't afford to sue a stronger ability to get redress. I can see why business hates it.
But by far the very worst proposal is one that would eliminate recent overtime regulations. This proposal is so deeply cynical, that I am going to reproduce it here:
New final regulations under the Fair Labor Standards Act (FLSA) will increase the annual salary threshold used to determine which employees are eligible for overtime pay from $23,660 to $47,476. The regulations affect longstanding employment models and impose additional costs that would hurt employers’ ability to hire more workers. Business Roundtable is particularly concerned with the implications of giving the U.S. Department of Labor authority to automatically increase the salary threshold to salary levels, whether based on inflation or using a 40 percentile threshold indexed to the weekly earnings of all full-time salaried workers nationwide. At the same time, the new regulations failed to remove complexities and uncertainties that would have made the rules easier for employees and employers.
At issue has been the creeping policy in the US to classify former hourly wage workers into "salaried" workers who are thus exempt from overtime laws. The fact that the old threshold was about $24 thousand (almost poverty line) shows that this rot has really deeply burrowed into the fabric of pay. I have bolded that particular line, because businesses who don't have to pay overtime to workers aren't going to hire new workers, since they are getting low cost or no cost labor already. Having worked in a number of businesses where I had to make hiring decisions, the primary way that we decided that we needed new workers was to see how much overtime we were paying. If people are getting time and a half, then it makes financial sense to hire new workers when overtime hits an average of 20 hours a week. These business people know this and they are simply lying here. But they are also being cynical by spinning this as some kind of thing that they want to do for the benefit of workers.
Regulation is always going to be the front line of the struggle between property rights and the right of society as a whole. But the fight has to be about each specific regulation and not about "regulations". We forget this. But this is where the war is won or lost.
