Saturday, September 17, 2011

Regulations Are an Opportunity for Job Creating Innovation

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It is an article of faith among Republicans (and far too many Democrats) that all those pesky "regulations" are to blame for the lack of jobs today and the ongoing economic slowdown. Just the first of this month, McClatchy had an article where they had surveyed small business owners across the country and the consensus was that in fact regulations are not the problem for small business but lack of demand is:

When it's asked what specific regulations harm small businesses _which account for about 65 percent of U.S. jobs — the Chamber of Commerce points to health care, banking and national labor. Yet all these issues weigh much more heavily on big corporations than on small business.


None of the business owners complained about regulation in their particular industries, and most seemed to welcome it. Some pointed to the lack of regulation in mortgage lending as a principal cause of the financial crisis that brought about the Great Recession of 2007-09 and its grim aftermath.


Other small firms say their problem is simply a lack of customers.
My bold and I think we see where the folks complaining about regulations are really coming from. While the small businesses are struggling to make traction and find customers, the big businesses are squeezing every penny out of their operations in order to meet the quarterly demands of Wall St. And the anti-regulations crowd show an incredible level of short-sightedness. Instead of a knee-jerk "regulations bad" approach, they should be looking on regulations as an opportunity for innovation and building new businesses.

I am in no way unique with this idea. A couple of weeks ago, David Dayen at FDL News built off of a NY Times article on environmental regulations effects on jobs. Elizabet A. Stanton of the Stockholm Environment Institute also presents the regulations create jobs side in this blog post.

Now most regulations come into being in response to some type of disaster, often man-made in some fashion. They are often directly related to the environment, health, or safety but are also due to things such as financial manipulations. Regulations usually come about in response to those disasters, especially the man-made types. Of course, the anti-regulation folks have standard responses such as "but that was just one bad apple, one rogue individual who did that." Or the always popular "whoever could have anticipated such a problem occurring," say a bridge collapsing or a river catching fire for example.

At a time when large corporations are sitting on record amounts of cash, investing in compliance with regulations would have a stimulus affect. Some of that investment is in the areas of policing to assure compliance but there is also the possibility of new industries that can be created. Innovation that might give us new tools for monitoring or cleaning waste discharge. But it seems the large corporations are too intent on maintaining a status quo, even when it includes poisoning the air, ground, or water, than they are taking a chance on discovering new ways of doing business. Maybe the extractive industries could devise cleaner methods of extraction or cleaning of waste or burning fossil fuels that have been extracted (no, I'm not going to hold my breath on this but still...)

American businesses and politicians like to talk about American Exceptionalism yet the political and business responses to regulations, show a level of cowardice in the refusal to consider compliance. If Americans truly are as exceptional as we claim, there should not be a refusal to find the innovation that allows for compliance with regulations, be they environmental regulations, financial regulations, or health and safety regulations.

And because I can:

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