The Wall Street Journal editorial page is effectively a lobbying arm of the U.S. Chamber of Commerce, so it’s no big shock to find it inveighing against EPA’s upcoming toxics rule. Nor, this being the WSJ, is it much of a surprise to find the editorial packed with faulty reasoning and errors of fact. (Their evidence of high costs? “The power industry estimates that the true costs of the utility rule will far exceed the EPA estimates.” Well then!) If you have the stomach for it, Media Matters plods through about a dozen of the mistakes, debunking as they go.
The right has produced a veritable avalanche of horsesh*t about the EPA recently, and the WSJ editorial is just one more shovelful. In the Republican debate the other night, Michele Bachmann said she’d rename EPA “the job-killing organization of America” and pass “the mother of all repeal bills.” Nobody so much as blinked. Among conservatives, the jihad against the agency is simply taken for granted. There’s not much point in rational persuasion at this point; there’s nothing left for defenders of EPA to do but fight, with whatever weapons they have at hand.
Still, just in case there are still “persuadables” out there, it’s worth highlighting a few important facts about regulations in general and green regulations in particular, pivoting off a few studies recently done by the Economic Policy Institute (EPI).
The first thing to note is that the macroeconomic effect of regulations has been wildly exaggerated. To hear Fox News tell it, Obama has issued a flood of new regs that are now crippling the economy and “killing jobs.” But regulations simply don’t have that large of a macroeconomic effect, positive or negative. This EPI briefing paper gets into it:
This report also examines the most direct government data on the extent of job loss from regulations. Since 2007, the government has published information on how many “extended mass job layoffs” employers attribute to government regulations/intervention. Over this period, only a tiny fraction of such job layoffs (about 0.3% of the 1.5 million of these layoffs each year) were attributed by employers to government regulations/intervention. Similarly, a study that reviewed job layoffs due to environmental regulations in previous decades found that such regulations caused well below 1% of extended mass layoffs.
The health of the job market is determined by economic growth, trade, monetary policy, commodity prices … not regulations. The exception is when deregulation lets certain sectors get out of hand and overleveraged, leading to massive bubbles and busts (see: financial sector, 21st century). But environmental regulations are just not that big a macroeconomic driver.
Conservatives like to invoke “uncertainty” and “lack of confidence” as reasons why regulations have extended effects. But there’s very little empirical evidence for Paul Krugman has taken to calling the “confidence fairy.” And as for certainty, the rules EPA is rolling out now have been brewing for over a decade. Industry has known mercury and other toxics are going to be regulated for a looong time — Bush spent a decade trying (and failing) to do it.
What’s causing the unpredictability is the scorched-earth warfare polluting industries have waged on the rules. That’s what causes the endless court cases, delays, and legislative skirmishes. Based on their behavior, if not their words, it appears polluters prefer uncertainty to, y’know, rules.
Of course, regulations do have short-term economic effects; there are winners and losers. Isaac Shapiro of EPI recently tallied up the cumulative costs and benefits of new EPA rules. Here’s what he found:
Two broad conclusions emerge from this analysis. First, the dollar value of the benefits of the major rules finalized or proposed by the EPA so far during the Obama administration exceeds the rules costs by an exceptionally wide margin. Health benefits in terms of lives saved and illnesses avoided will be enormous. Expressed in 2010 dollars:
• The combined annual benefits from all final rules exceed their costs by $32 billion to $142 billion a year. The benefit/cost ratio ranges from 4-to-1 to 22-to-1.
• The combined annual benefits from four proposed rules examined here exceed their costs by $160 billion to $440 billion a year. The benefit/cost ratio ranges from 12-to-1 to 32-to-1.
Second, the costs of all the finalized and proposed rules total to a tiny sliver of the overall economy, suggesting that fears that these rules together will deter economic progress are unjustified.
So for the regulations in question, the winners — in terms of both people and dollars — vastly outnumber the losers.
But what about the effects on jobs specifically? There will be short-term employment effects, no? EPI’s Josh Bivens takes a look at that question in an analysis released yesterday, which homes in on the employment effects of the upcoming toxics rule. He does what too few economic analysts do and takes into account the fact that the economy is currently in a state of excess capacity, with low demand and high unemployment. In that situation, regs that bring investment capital off the sidelines do not necessarily divert it from other productive uses; it’s just sitting there, idle.
After balancing the negative (higher utility costs and energy prices) and positive (investment in pollution control sector) employment effects, Bivens concludes, “claims that this regulation destroys jobs are flat wrong: the jobs-impact of the rule will be modest, but it will be positive.”
Of course EPA’s toxics rule is not a jobs program. It’s not intended to create jobs but to secure enormous public health, quality of life, educational performance, and social justice benefits at relatively small financial cost and negligible effect on overall employment. And that is just what it will do.
Conservatives are hiding behind abstractions — job-killing big-government blah-blah — but don’t be fooled. They are not protecting “the economy” or “jobs.” They are protecting a specific set of polluting industries, at the expense of the public interest. Put that horsesh*t in any ideological serving dish you want. It still stinks.