Economics focus Clause and effect

摘要

AMERIC AN policymakers are pulling every lever they can to re- vive the economy, from fiscal stimulus to quantitative easing.The big exception has been regulatory policy. From environmental protection to bank oversight, the rule book has steadily thickened in recent years. Republican critics of Barack Obama think this explains America's economic malaise. Scrap the rules, they claim, and the economy will spring to life. Nonsense, responds the Treasury. In a recent article, Jan Eberly, an assistant secretary for economic policy, scrutinised the behaviour of corporatebond yields, corporate profits and other indicators. She found no evidence that regulatory uncertainty is holding businesses back from hiring or investment; weak demand is the big culprit. Yet regulation, if not a prime suspect, could still be an accomplice. Rules raise costs by compelling businesses to do things differently. That is acceptable if the benefits—whether cleaner air or stabler banks-justify the costs. Ever since the administration of Ronald Reagan, presidents have required federal regulators to demonstrate precisely that. There is a growing view, however, that cost-benefit analysis should go further than just considering what a firm pays to comply with a rule or the premium a consumer pays as a result of new regulation. On this view, it should also incorporate the harm suffered by workers who lose their jobs. Regulators in America do routinely estimate the impact of new rules on jobs, but such estimates do not enter the ledger when they calculate a rule's costs. This is not as odd as it sounds. In theory regulation rearranges the distribution of economic output, away from the newly regulated activity towards less regulated ones, but does not affect its overall volume. The calculations assume that, on average, workers who lose their jobs because of a new rule find other work at roughly the same pay.