The Economist has a look at regulation in the age of Barack Obama and concludes that unlike many other charges lobbed against the president, the notion that he has enmeshed America in stifling new rules is well grounded.
During his first two years in office, President Obama issued 132 “economically significant” new rules, the costs or benefits of which each exceeded $100 million a year. That is about 40 percent more than the annual rate under both George W. Bush and Bill Clinton. And many of the regulations associated with health-care and financial reform are still to come.
Existing rules are also being enforced more keenly. The workplace safety regulator slapped employers with 167 percent more violations during Obama’s first year than in Bush’s last. The Food and Drug Administration has stepped up scrutiny of drugs that have already been approved for sale. The regulatory workforce has grown 16 percent in the last two years while private employment has fallen.
Not all of the new rules are detrimental to the nation’s recovery but the sheer size of them coupled with the widespread expectation — or fear — that even more regulations will be enacted in the years to come, is certainly not good for business. “Also unquantifiable is the innovation that may be deterred by regulation,” according to The Economist.
Rules meant to deter the abuse of student aid by for profit colleges could stunt the growth of college courses taught over the Internet; tighter conditions on drug approvals, prompted by much publicized scandals, raise the cost of drug research, especially for small companies; and “net neutrality” rules could expose Internet access providers to stifling litigation.
Every government intervention in the private sector has unintended consequences; none of them ever benefit growth and business freedom.
President Obama hasn’t been good for capitalism these last two years. He is now reaching out to the business community and signalling a willingness to scrap unnecessary bureaucracies and rules. Let’s hope the next two years will be better.