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Regulatory agencies like the EPA have a bad habit of trying to cure all the ills of the world through regulation. It’s like the old saw, if you give a guy a hammer, everything starts to look like a nail. Given this well-known dynamic, it shouldn’t be a big surprise that a group of bureaucratic regulators believe that the world needs a lot more regulations.

Oren Cass, Senior Fellow at the Manhattan Institute, believes that the EPA has pushed its regulatory agenda too far. One of the ways they do this is the way in which they conduct cost/benefit analysis, where they tote up every possible dime of benefit, and discount many of the costs. How can we know the right point to back off on regulations?

Cass believes that the actions of the American people make that clear. As he notes, practically every town and municipality in the country is fighting for industrial facilities. They want industry to move to their towns. They are willing to endure a bit more stress on the environment for the opportunity to have more and better jobs. That’s a strong indicator that the people of this country are actually in conflict with the EPA that is pushing even more stringent regulations.

EPA Under Trump May Roll-Back Obama Regulations

Scott Pruitt under Trump has indicated that the agency intends to reverse and roll-back many of the Obama administration’s regulations. He wants to loosen fuel-economy and air pollution regulations for the automobile industry. He also delayed the implementation of rules for chemical storage and risk management proposals for industry. These are just two examples of what Pruitt and Trump believe is regulatory over-reach.

Pruitt claims that these regulations have all been passed with zero input from Congress. Although, Congress wrote the original Clean Air Act and has revised it three times since it was implemented. Nonetheless Pruitt and Trump seem united in the opinion that many regulations are too stringent and prevent economic growth while offering little or no real benefit to the public.

Oren Cass - Balancing the environment and economic growthDiminishing Returns Under EPA Regs

It is a well-known fact of economic theory that in many cases adding more provides incrementally less gain, this is called the law of diminishing returns. For example, the first million spent on environmental clean-up, when the big obvious issues were addressed, created a massive improvement in the cleanliness and quality of the environment. The next million would produce somewhat less of a benefit, until at some point, the costs for incremental improvement are huge while the gains are miniscule or even immeasurable.

Cass believes this may indeed be where we currently are with environmental regulations. The fact that people are fighting to get smokestack industries to move to their towns, is a strong indicator that Americans are willing to tolerate a few more parts per billion in air particulates. The American people understand that there is a balance and trade-off between a pristine environment and economic growth. Perhaps the EPA should listen.

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