Economy

Think tank makes the case for government regulations

by Peter Schroeder - 04/12/11 5:34 PM ET

Rather, EPI points to the recent financial crisis and the
Deepwater Horizon oil spill in the Gulf of Mexico as proof that a lack of
regulations can be just as damaging as too much rulemaking. Any perspective
that views regulations as nothing but a burden “is far from complete,” the
group argued.

“Regulations are often necessary to produce flourishing and
stable job markets,” said John Irons, EPI’s research and policy director. “A
polluted river will lead to fewer fishing jobs.”

Even if regulations do bring with them added costs to the
private sector, sometimes the benefits still outweigh the costs. EPI cited a
study from the Environmental Protection Agency that found that while the
economic costs of complying with the Clean Air Act Amendments of 1990 would
total $53 billion, the value of the benefits stood at $1.3 trillion.

“Over the past several decades the benefits of regulations
have consistently and significantly exceeded their costs,” the group wrote.

They also contended that any studies that simply look at how
much it will cost the private sector to meet new government rules fails to see
the entire picture. Any analysis of the economic impact of government
regulations needs to account for other factors beyond the immediate cost.

“Regulations can be designed to explicitly benefit the
economy and particular industries, and they can lead to investments that create
jobs, improve worker health and thus productivity, and spur important
technological innovations, among other positive effects,” the report stated.

In fact, many studies that cast a harsh eye on regulatory
costs overstate their case, EPI argued. Throughout history, EPI said opponents
of regulations have issued dire warnings about the impact of new rules that
ultimately prove inaccurate, for things ranging from seat belts to the creation
of the Food and Drug Administration.

“In discussions of proposed regulations, it is important to
bear in mind the tendency for their estimated costs to be exaggerated,” the
report stated.