Why Regulations Can Be Good

Why Regulations Can Be Good
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This is the second in a series of posts exploring some of the things that must change in government and society to fix America.


Republican leaders in Congress and conservative think tanks are drawing up their lists of federal regulations they want President Trump to help them kill once he takes office. Judging by his campaign platform Trump is eager to cooperate. He has promised to "reform the entire regulatory code" and to issue a moratorium on new government rules that are not required by law.

Trump believes that government regulations "force jobs out of our communities" and punish Americans for doing business in the United States. "We will no longer regulate our companies and our jobs out of existence," he has said.

Are there unnecessary or unnecessarily burdensome regulations? Undoubtedly. Do we want government controlling our lives? No. But some regulations are necessary to save our lives. Many actually create jobs, are wanted by business, advance important national goals and are necessary to protect the American people from the bad actors in our society.

The benefits of good government rules have been obvious for generations. Without laws like the Clean Air Act of 1970 and the Clean Water Act two years later, and without the regulations that implemented them, we would have a much dirtier and sicker country. Rivers would still be catching fire, more oil spills would be killing oceans, fish would be inedible because of toxins in their flesh, many more of our children would get sick or die from asthma caused by air pollution, cancer would be as common as the common cold, our water would be unsafe to drink and every day would be a bad-air day.

Before President Trump begins killing regulations (almost as complicated as creating them), he should weigh their benefits and costs case by case. Here are a few things he should consider specifically in regard to regulations on business and industry, the most common source of complaints that the government handcuffs job creation.

First, to put things in context, there are more than 22.6 million businesses in the United States. Nearly three of every four are small enterprises, the biggest source of new jobs but also the firms that because of limited resources may have the hardest time complying with government rules. Depending on the nature of their enterprises, they must deal with rules that range from worker safety to the quality of our food. It's fair to say that relatively few companies are knowingly engaged in practices that hurt people or the environment.

But not all companies are good corporate citizens. Many regulations, including most of those involving environmental protection, are a result of industries failing to regulate themselves.

Industries could monitor their "own adherence to legal, ethical, or safety standards, rather than have an outside, independent agency such as a third-party entity monitor and enforce those standards." But history is filled with examples of corporations that put social responsibility far down their priority lists, if it is on their lists at all. Their first priorities of course are profit, shareholder returns and competitive advantage. But in pursuit of those goals, some companies engage in practices that are socially irresponsible, if not dangerous.

Prominent examples today are the powerful companies that produce and burn fossil fuels. We now know that the pollution from fossil fuel combustion has saturated the atmosphere to the point that the Earth's climate is changing in seriously dangerous ways. Oil and gas companies could be making the transition away from fossil fuels to clean energy not only to limit climate change, but also to become leaders in the rapidly growing clean energy sector. Instead and in general, the oil and gas industry is sticking to its old business model of pulling as much product out of the ground as possible. While the companies profit, millions of Americans already are being hurt by climate change and countless generations to come will continue to bear the cost of drought, fire, floods and other disasters.

In a perfect society, companies, like doctors, would commit to doing no harm. Their business model would be to profit from activities that are consistent with the public good. There are many companies that adhere to a kind of corporate hypocratic oath. More than 200 corporate CEOs representing 19 million employees worldwide are members of the World Council on Sustainable Development, for example. One of their projects is to have businesses use fuels that contain 50% less carbon, a strategy to grow the global market for clean and sustainable energy. More than 80 U.S. companies, including many of our largest, have promised to switch to 100% renewable energy.

Smart corporate leaders actually welcome reasonable regulation, although they may not admit it in public. Regulations ensure that each company and its competitors operate on the proverbial level playing field. Otherwise, clean companies that pay for pollution prevention would not be able to compete with dirty companies that don't.

Regulations prevent bad actors from damaging the reputation of their industries and jeopardizing their "social license to operate". Several of the regulations that reportedly are on the chopping block are focused on the natural gas industry, a sector whose production is booming at the same time some of its practices - fracking and methane leaks for example - are controversial. The Center for the New Energy Economy (CNEE) at Colorado State University has held annual conferences with leaders of the oil and gas industry to discuss issues like these. CNEE reports that:

Reasonable and effective regulation is important to natural gas producers because it creates business planning certainty; screens out the "bad actors"; reduces the chances that companies within the energy sector will obtain unfair advantage by engaging in irresponsible practices; and strengthens the industry's "social license to operate" - i.e., public trust that energy is being produced in ways that are consistent with public health, welfare and quality of life.

The National Petroleum Council (NPC) concurs:

Achieving the economic, environmental and energy security benefits of North American natural gas and oil supplies requires responsible approaches to resource production and delivery...(I)n all locales and conditions, the critical path to sustained and expanded resource development in North America includes effective regulation and a commitment of industry and regulators to continuous improvement in practices to eliminate or minimize environmental risk.

Second, federal regulations are not created by fiat. There is no secret back room in which federal control freaks plot to regulate business. Most rules are the result of laws passed by the people's representatives in Congress. Each proposed new rule must go through an arduous process of public and legal review before it can become final. Proposed rules are scrutinized for their costs and benefits to the American people. Once they are finalized, they are routinely challenged by lawsuits that further test their legality.

Third, regulations can create jobs. For example, federal rules that require companies to repair environmental damage have resulted in a "restoration industry" in the United States. Researchers at the University of North Carolina at Chapel Hill have determined that these rules support more than 220,000 jobs and $25 billion in economic activity. This restoration economy provides more direct jobs today than coal mining, logging or steel production.

Finally, most Americans support environmental regulation. The Pew Research Center reported earlier this year that while opinions vary from state to state, 59% of American adults nationwide say that stricter environmental regulations are worth the cost.

That's not to say that conservatives and progressive all agree. Weeks before the election, Pew found a deep divide between Trump and Clinton supporters when it came to regulating carbon pollution.

But perhaps the divide is a result of the bad rap that government regulations routinely receive and often do not deserve. It would be a wonderful world if every American and every American company operated by the "do no harm" principle. Unfortunately, that is not the world we live in.

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