Econo-Misery and Three Econo-Myths

But there's another key element of economic holdback about which the government and the press remain in denial.

2. Regulations really aren't that excessive -- and besides, they don't cause jobs losses.

This is a real craw-sticker. At least twice recently, Christopher Rugaber at the Associated Press, which really ought to end the pretense and rename itself "The Administration's Press," has criticized candidate assertions during the Republican debates about how regulations are killing jobs. Rugaber's most risible claim:

... Labor Department data show that few companies where large layoffs occur say government regulation was the reason. Just two-tenths of 1 percent of layoffs since Obama took office have been due to government regulation, the data show.

One hardly knows where to begin. Here are just a few of many valid counterarguments:

  • Companies usually cite multiple reasons for layoffs and plant closures, and sometimes don't mention regulations at all, even if they're relevant. Take two paper company closures occurring in Hamilton, Ohio, just north of Cincinnati, during the past month. One company, in announcing 237 layoffs, cited "competition from Asia, rising costs of raw materials and uncertainty surrounding new federal pollution rules." Is this one part of Chris's 0.2%, or does it not count because the "pollution rules" weren't mentioned first? Clearly, regs were relevant. The second company is terminating 133 jobs and will "transition manufacturing" to mills in another state. The coverage of their announcement doesn't say a word about regulations, but since the second company's plant is similar in age to the first company's, pollution regs were also probably relevant there. Yet it won't count in Chris's calculations.
  • Looking only at large layoffs is an obviously incomplete procedure. Small layoffs tend to happen at smaller enterprises, may affect more employees in total, and are more likely to occur due to increased regulatory costs.
  • There are two well-known recent examples of regulations killing jobs that don't directly involve layoffs. The Obama administration's regulatory slowdown of Gulf of Mexico deep-water drilling permit approvals in the wake of last year's BP oil spill is preventing over 10,000 people from getting back to work and causing some rigs to move, permanently ending related job opportunities. The Washington Examiner recently reported that a lawyer at the National Labor Relations Board, which regulates union-worker matters, was "joking" in an email "that the NLRB's suit against Boeing would kill jobs in South Carolina" -- potentially about 4,000 of them. Is that in your numbers, Chris?
  • As I noted in October, "laying a worker off is not the only way to 'kill' a job," as Rugaber would seemingly have us believe. Regulatory burdens can and do cause companies to reduce their workforces through attrition, not replacing those who retire, deciding to manufacture new products overseas instead of domestically, and hiring temps, seasonal, or part-time workers instead of full-timers.

3. The flat economy is hurting government employees, while the private sector is doing okay.

This claim was made by Harry Reid and dutifully regurgitated a short time later by Tom Raum at the AP in October. Seasonally adjusted public-sector employment didn't stop growing until May 2009, the month before the recession ended. Federal non-postal employment has increased by 130,000 since Obama took office. The private sector, while gaining over 2.7 million jobs since the beginning of 2009, is still down by over 6 million jobs from its pre-recession peak, and is at the same level it was in the spring of 2004. By comparison, state and local government employment, both of which grew too much during the past decade and stayed artificially high through the recession, are back to where they were in early 2006. There's no reasonable doubt that the greater pain by far is still in the private sector.

The White House and Congress should be doing everything they can to get the private sector fully back on its feet. But they're not. That's because the administration and congressional Democrats' aim, as evidenced in Dodd-Frank, ObamaCare, and so many other legal and regulatory matters, is to permanently make the government a bigger and ever more intrusive part of the economy and every citizen's daily life. That, dear readers, is not a myth.

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