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A balanced regulatory approach

Like last week’s column, today’s offering is less for message-makers and more for truth seekers (to put it too grandly). Both pieces speak to Republicans’ vacuous prescriptions for our economy, which rest on two principles: less spending and less regulation.

Earlier I argued that while Republicans are right to say we have a spending problem (though disingenuous about its origins), it has not negatively affected our economic growth, and GOPers are dead wrong in contending we don’t have a revenue problem.

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The second leg of their inherently unstable economic stool rests on the myth of over-regulation. 

Acting on this analysis, last week House Republicans acted to prevent implementation of food-safety inspections that were part of a regulatory overhaul.

Speaking in another context Sunday, Senate Minority Leader Mitch McConnell (R-Ky.) told Bob Schieffer, “If you talk to business people … you find out their biggest complaint is over-regulation. The federal government … [is] busily at work trying to regulate every aspect of American life — in healthcare, financial services, through the Environmental Protection Agency … [business has] $2 trillion in cash. The reason they’re not investing that in hiring more people is the government has made it very expensive to expand employment.”

Is America over-regulated? That question only has meaning in context — over-regulated compared to what? 

Not compared to any other industrial nation on earth. Economists for the OECD, the club of the world’s leading economies, studied regulations in their 30 members and in 10 other nations. 

The findings would shock purveyors of the GOP’s conventional wisdom — the U.S. economy is less regulated than that of any country studied save the U.K., with which we are essentially tied. American business is less regulated than businesses in Germany, Norway, Japan, Korea, Israel, Brazil and Chile, to mention just a few. 

The simple fact is that no major economy in the world is meaningfully less regulated than that of the United States.

In the end, though, neither the Republicans nor I care much about regulation elsewhere. They argue that regulation inhibits economic growth.

If the U.S. and the U.K., the world’s most deregulated economies, had enjoyed high levels of economic growth in recent years, this argument might have merit. However, it just wasn’t so. Indeed, some of the most highly regulated economies in the world — Russia, China, Israel and Luxembourg — have enjoyed some of world’s fastest growth rates. 

Detailed statistical analysis by OECD economists finds only one regulatory sphere with any possible impact on economic growth — barriers to entrepreneurship — a category that includes legal barriers and burdens in creating corporations. This is not an American problem, and these are not the kinds of regulations against which Republicans rail.

That does not mean every regulation on the books is wise, nor that every wise regulation is really necessary. We all have examples. A Customs agent recently explained that I was required to undergo a complete agricultural inspection because, upon entering the country, I admitted to carrying some candy, and one type of German candy is banned in the U.S. because it contains a toy inside a chocolate egg — a potential choking hazard. 

Could that and much more be streamlined? Certainly. Is America over-

regulated? Certainly not. Is over-regulation killing growth? Not here, and not in other advanced economies.

While Americans shake their heads at generic “regulation,” it is not a dirty word, GOP efforts to demonize notwithstanding.

Voters overwhelmingly support a wide variety of environmental, heath, safety and labor regulations. More than three-quarters favor regulations to reduce carbon emissions from vehicles and power plants, require tougher fuel economy standards, protect workers’ safety, ban indoor smoking, toughen the chemical safety regime and give the EPA more power to regulate pollution — to name a few.

Massive deregulation is neither the wish of the American people nor a cure for our economic ills.

Mellman is president of The Mellman Group and has worked for Democratic candidates and causes since 1982. Current clients include the Majority Leader of the Senate and the Democratic Whip in the House.