Saturday, September 03, 2011

No Easy Answers

A week or two ago the liberal blogosphere was celebrating an executive order from Obama that would cause federal agencies to use available funds creatively in order to create jobs. It was considered to be sort of a “poke in the eye” to Congress, and he was praised for taking action on his own when Congress would not.

I had no argument with the action itself, but I had some reservation about the principle of governance by executive order. I pointed out that we are happy with this because it is a Democratic president issuing an order that we like, but asked what would be our reaction if it were a Republican president issuing an order we did not like? Responses ranged from “Oh, foo” to calling me names that shocked even me a bit.

Then Obama issues an order canceling ozone regulation and it turns out that, indeed, we most certainly do not like governance by executive order when we do not agree with the order, even when we like the president issuing the order.

Paul Krugman weighs in with his usual ability to see only one side of any picture, claiming that ozone regulation would actually be a good thing for the economy because it would force businesses to buy new equipment to meet the regulations, and that is what we are trying to do, create the spending of money. He doesn’t stop to think that businesses which can’t afford to spend that money will simply close their doors, putting more people out of work.

I have actually seen this at work, which is why the fallacy of Krugman’s remark so immediately struck me. When I was in the steel business I was selling sheet steel to three companies which were manufacturing small battery chargers. They were having problems with increasingly strict regulations on the release of paint fumes into the air, and finally one of them bought an enclosed paint line. The other two went out of business. A lot of jobs were lost and, of course, I lost two customers. Did the remaining one hire more workers because of increased business? No. In fact, it reduced workers because the paint line not only solved the environmental issue, it was also automated.

To make the story even more interesting, a fourth customer nearby was also having paint pollution problems and I persuaded him to convert to making his product out of sheet aluminum. That eliminated the painting altogether, but it made his product a bit more expensive and it eliminated, as I recall, a dozen or so jobs in his factory.

All of this over the regulation of paint fumes. Don’t get me wrong, I highly approve of that regulation, but don’t try to tell me it comes without cost.

It always amazes me when these ivory tower economists start talking about how various things will affect businesses, when not one of them has ever been within hand grenade distance of running a business themselves, and almost certainly none of them has ever so much as held a conversation with anyone who has done so. They may know their magic formulas inside and out, but outside of their ivy-covered cloisters they are complete idiots.

The upshot is that I have mixed feelings on this ozone regulation thing. I’m uncomfortable with the decision being left to presidential decision, my opinion is that we need tighter regulation, and I happen to agree with Obama that there is cost involved. There is no easy answer here.

1 comment:

Bartender Cabbie said...

I think that I would like to visit some of these blogs you read. I am pretty sure that without much effort I would get folk a bit riled up by just being myself.

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