NEW YORK, NY – The idea of regulation — of using the institutions of government to set and enforce rules for the world of business — has come under fierce attack. This week, House committees will hold four separate hearings based on the premise that our nation’s economy is chafing under the restraint of excessive regulation and overly powerful regulators.
President Obama, although he has defended the general need for rules (and some of the particular reforms that have been targeted recently), has announced his own effort to root out regulations that may be unnecessary, burdensome, or “just plain dumb.”
In "Good Rules: Ten Stories of Successful Regulation," the national policy center Demos looks at the side of the story that has been all but forgotten lately: the many ways, over many years, in which acts of federal, state, and local rule-making have made America a far better place.
"In the school of brutally hard knocks, America has relearned something about the business world: it needs rules," Demos Senior Fellow James Lardner writes at the beginning of the report. “The most devastating financial crisis since the Great Depression, the biggest mining disaster in four decades, and the worst undersea oil leak ever (and one of the worst environmental tragedies) have driven that point home."
But the ten stories that he goes on to tell demonstrate, he says, that effective regulation, besides being vitally important, is also “within our power to achieve.” Regulation, these stories show, has brought far-reaching health, safety, environmental, and economic benefits across a wide range of industries and realms of life. Just as important, the benefits have come, again and again, without “the frightening economic costs predicted – indeed, taken for granted – by its dogmatic opponents.”
Here, in brief, are the 10 stories chronicled in the report:
1. Building Codes and Fire Safety. From colonial times until the early 20th century, urban America was a place where small fires caused by chance accidents could leap from building to building and block to block and end up destroying entire downtowns. One by one, America’s cities stepped up to the need for serious standards of safe construction.
2. The Americans with Disabilities Act. Twenty years after the law was enacted with sweeping bipartisan support, America’s streets, theaters, restaurants, and workplaces are far friendlier to people with disabilities.
3. Automobile Safety. Americans drive three times as much as they did before auto safety regulation took hold, yet the absolute number of fatalities has fallen — from 54,000 in 1972 to under 34,000 in 2009, or 4.2 deaths per million miles in 1972 to about 1.16 deaths per million miles today. Now, car manufacturers tout their products' safety features and covet industry awards for safety.
4. Banning DDT. Until a whistleblower exposed this pesticide’s role in the near-extinction of numerous bird and fish species, chemical and agribusiness companies could spray almost anything they pleased onto America’s food and farmland.
5. The Fair Labor Standards Act. In one law, the U.S. prohibited child labor, established a minimum wage, and made the 40-hour week a national standard; this was a cornerstone for postwar middle class growth.
6. “Do Not Call.” With this important regulation, Congress and the Federal Communications Commission developed a light-touch answer to the problem of aggressive telemarketing.
7. Cigarette Smoking. Today, thanks to state-based efforts such as higher taxes and smoke-free zones (starting with public buildings, ending with restaurants and bars), just a fifth of all high school seniors smoke, down from a third as recently as the mid-1990s.
8. The Community Reinvestment Act. After sweeping civil rights and fair lending laws failed to address the problem of “redlining,” congressional leaders devised a way to use disclosure to prod lenders into a process of self-examination and reform.
9. Acid Rain. Two decades ago, Congress adopted a system of permits that let companies buy and sell the right to pollute. Results came quicker and less expensively than almost anyone expected.
10. Drug Pre-Testing. Thalidomide caused an estimated 12,000 birth deformities. Isoproterenol inhalers led to the deaths of 3,500 asthmatic children. In these cases and dozens more, other countries suffered while America was largely spared, through the diligence of the Food and Drug Administration.
"Whether we’re talking about global warming or financial derivatives or infected eggs, progress will depend not only on the enactment of new rules but on the reinvigoration of public institutions suffering from what former EPA administrator William Ruckelshaus has called 'battered agency syndrome,'” Lardner said.
"Financial deregulation was the so-called ‘job-killer’ that has left 15 million Americans out of work," said Heather McGhee, Director of the Washington Office at Demos. "Rather than taking lobbyist wish-lists and politicizing common-sense rules, the new Congress should champion the regulations that can improve Americans’ quality of life.”
Jim Lardner is a Senior Fellow at Demos and the author of numerous articles and reports. His report on credit-rating agency reform advanced a proposal that was subsequently incorporated into the financial reform measure enacted by Congress in June 2010.
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