Stephen Gold is president and CEO of Manufacturers Alliance for Productivity and Innovation (MAPI), an executive education and business research organization in Arlington, Va. (www.mapi.net).
Over 2,100 Regulations Since 1981
Such a system surely doesn't exist now. The MAPI-NERA study found that since 1981, the federal government has promulgated 2,183 manufacturing regulations—or just under 1½ regulations per week for more than 30 years. Moreover, these regulations have been layered one on top of another during those three decades, interacting to create additional distortions in manufacturing economic activity. As observed by Dr. David Montgomery, NERA's principal investigator for the report, the actual impact on manufacturers is considerably greater than simply the sum of the individual regulations. No wonder manufacturers see the current regulatory regime as death by a thousand cuts.
And that’s only part of the story. NERA couldn’t measure the impact of all regulations, because the Office of Management and Budget is only authorized to assess the cost of "major" regulations—those promulgated by executive-branch agencies that have an annual effect on the economy of $100 million or more. Ninety percent of regulations that affect manufacturers—almost 2,000 of the 2,183 rules—don’t meet that threshold, so NERA was unable to examine cost estimates for them.
One factor not considered in the MAPI-NERA report was the benefits of regulation. Society obviously benefits from health and safety regulations. But MAPI chose not to measure these because no matter what the findings, in times of high unemployment and little income growth nothing could justify the “costs-don’t-matter” approach that regulatory advocates prefer. If policymakers want a competitive manufacturing sector, they need to implement a more coordinated approach that results in more cost-effective regulations.
