Nathan Tran (PO ‘
In 2017, Gallup found that 45% of Americans — including 68% of Republicans and 20% of Democrats — believe that the government excessively regulates business and industry. In contrast, only 29% think that there is just the right amount of regulation, while a relatively paltry 23% desire more.
This is probably not much of a surprise. The capitalist consensus has long been that the United States is the land of the free (market) and the home of the brave (entrepreneur). One commonly attributed cause of the American Revolution was the British Empire’s strict commercial regulations, such as the infamous Navigation Acts in the late seventeenth century and the even more infamous Tea Act in the late eighteenth century. Compare this to today: one can only wonder how John Hancock would react to seeing beauticians borrow tens of thousands of dollars to earn cosmetology licenses, or over 5,000 different rules regarding apple farming. More broadly, NPR estimates that the federal government was responsible for around 22,000 pages of economic regulations in 1960; in 2016, that number ballooned into 185,000.
Recognizing a growing sense of “regulatory fatigue” among small and large businesses alike, Donald Trump put promises to “drain the swamp” of federal bureaucracy at the center of his 2016 presidential campaign. Upon taking office, President Trump established a “one-in, two-out” rule, in which he would only approve a new federal regulation if two other regulations were cancelled; by one 2018 measure, Trump ended up cancelling four times more regulations than he enacted.
Now, Trump is placing his deregulation plans at the center of his 2020 reelection effort. In his latest State of the Union Address, Trump boasted that he slashed “a record number of job-killing regulations” through an agenda he called “relentlessly pro-worker, pro-family, pro-growth, and most of all, pro-American.” However, what does this agenda truly mean for American workers and families? To answer this question, let’s analyze some of the assumptions central to Trump’s deregulatory crusade.
Assumption #1: Regulations consistently drain money from the economy.
In 2017, Vice President Mike Pence claimed that the first year of Trump’s deregulation efforts had saved taxpayers up to $18 billion, citing a report by the American Action Forum (AAF) that claimed that Trump’s deregulation could result in as much as $71.6 billion in potential net savings. However, the AAF (like the multiple other research institutes that share its conclusions) is confirmed to be a “conservative dark money group” expressly dedicated to lobbying for massive tax cuts and deregulation.
In contrast, around 2016, the Office of Management and Budget (OMB) released a much more impartial analysis of the costs of enforcing and contesting major federal regulations. According to this report, these regulations actually produced as much as $800 billion in net benefits for the American economy between 2006 and 2016 — 12 times more than the costs of their enforcement — because they guaranteed that businesses of varying scale could compete on equal footing and with minimal environmental or social externalities. Indeed, a 2014 survey even found that the vast majority of Democratic, Republican, and Independent small business owners believed that environmental regulations (particularly those ensuring clean water) were “necessary to maintain a healthy economy and create local jobs.” More specifically, take this testimonial from Bill Mook, the owner of a small oyster farm in Maine:
My business is wholly dependent on clean coastal waters. In 1998, I was nearly put out of business by a septic tank pumper illegally emptying his truck 150 yards from our hatchery intake pipe. But many factors – sometimes from distant sources – can seriously affect the productivity of the ocean ecosystem I rely on. For example, carbon emissions are causing acid levels in our coastal waters to increase as more CO2 dissolves in the water and freshwater runoff increases. Warming ocean temperatures are linked to the rise of pathogenic bacteria that can kill our oysters or make people sick. For us to avoid these threats and continue providing safe, healthy seafood to consumers, we must have clear, commonsense regulatory limits on pollution – period.
Unfortunately, the Trump administration has made a determined effort to suppress the OMB report and reports like it from public discourse as much as possible. As such, one can predict that his reelection campaign will continue to frame deregulation as a universally beneficial position.
Assumption #2: Deregulation creates jobs and spurs economic growth.
This assumption has a solid historical foundation. Throughout the late 1970s, Democratic President Jimmy Carter undertook a concerted effort to deregulate a wide range of commercial activity. For instance, Carter lifted restrictions on homebrewing beer, enabling the number of American breweries to grow at least one hundred times larger. Additionally, Carter also stripped regulations in the commercial flight industry, which replaced a four-way oligopoly with a more competitive airline market. Generally, Carter’s deregulatory agenda went a long way towards making the American economy more flexible, competitive, and fair.
Nonetheless, the correlation between deregulation and increased employment is far from consistent. Liberal think tank Demos points out that while the Bush administration enforced far more business regulations than the Trump administration, both were able to achieve unemployment levels of under 5 percent. Demos further asserts that “inadequate regulation of Wall Street banks” was the direct cause of the Great Recession, which caused millions of job losses and immeasurable economic stagnation across the United States. As such, business regulation cannot and should not be viewed as a universal good or a universal wrong; each regulatory measure ought to be scrutinized on its merits.
In the coming weeks, I intend to publish another article doing just that. It will more closely analyze the implications of several specific and significant regulations that the Trump administration has attempted to amend, replace, or repeal. Please stay tuned!