The attack on regulation, and what can be done about it

Photo by tom coe on Unsplash

Regulation has become a dirty word.

Republicans have made sure of it. Regulation is the process by which government makes sure private entities do not cheat, steal or injure regular people. In effect, they take into consideration the needs of all of society, and limit the amount of profit private enterprise can extract from our community.

Not surprisingly, given their stated goal of helping private enterprise maximize its profits no matter what the impact upon society, Republicans have made reducing regulations a matter of faith. Despite his claims during his campaign of being a different kind of Republican — a populist as it were — Trump has behaved like a traditional Republican in this regard.

Evidence of this priority is everywhere:

  • The administration is implementing regulations that will allow less comprehensive health insurance than Obamacare otherwise required, jeopardizing the stability of the insurance marketplace.

In each case, the goal is the same: expedite the transfer of wealth from society to wealthy private interests.

How have they convinced us to go along with this policy? By using the same approach they have convinced many working people to go along with tax cuts for the rich. They argue that if the rich are allowed to get richer, they will create jobs for the rest of us. Thus far, the evidence has not been convincing.

In fact, the opposite appears to be true. The effects of regulation have appeared to have a positive effect upon society, despite claims to the contrary.

What’s more is that many industry leaders actually favor regulation. Consider this example. At one point, a major food manufacturer decided they needed to reduce the amount of sugar in the snacks they produced for children. So they reformulated their products with less sugar. The response? Their competitors increased the amount of sugar in their products, forcing this one producer to back off from their commitment to child health.

Had the government instead issued a regulation that required the manufacturers to reduce the amount of sugar in food made for children, then that one manufacturer could have pursued its commitment to child health without fear of its competitors undercutting this effort.

This is also the reason why the auto industry is not in favor of the administration’s efforts to reduce the CAFE industry fuel economy standards. Since they have already made the commitments required to reduce emissions and increase economy, these reductions are just an invitation to their competitors to undercut them.

People are outraged when they find out that the administration can take such important policy steps without the approval of Congress. The truth is that Congress has abdicated its responsibility here.

Consider the following. It is hard to pass legislation. As they say, the devil is in the details. As a result, Congress will pass legislation that is very broad and non-specific, delegating authority to bureaucratic agencies to figure out a way to address Congress’s mandate. The problem is that the legislation is often so indefinite that the agency can either address the goals with aggressive measures or with window dressing, or anything in between.

This happened with the efforts to address banking abuses in the wake of the financial crisis. The banks knew that there was little they could do to stop Congress from passing the Dodd-Frank financial reform act after their outrageous behavior came to light and caused so much hardship for everyone. Instead, they argued that Congress should state clearly its goals but leave the methods undefined. Then, the banking industry spent billions on a lobbying effort to make the regulations adopted to implement this law as ineffective as possible. In this way, they took out the law’s teeth.

In theory, this process is still overseen by the people we elect to Congress. After all, the regulators must address the requirements Congress gives them, at least to some degree. Sometimes, the regulators don’t even succeed at that, resulting in litigation that the agencies are behaving arbitrarily and capriciously — in other words, outside of their legislative mandate.

In the long term, then, the way to stop these efforts to undermine regulations by non-elected bureaucrats is for Congress to do its job: be specific in what it requires and leave less discretion to the agencies in how to implement it. If Congress wants higher fuel economy standards, state what they should be; don’t just leave it up to the bureaucrats to respond to fuzzy direction from Congress.

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Mike is an Assistant Professor of Management for Legal and Ethical Studies at Oakland U. Mike combines his scholarship with practical experience in politics.

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