Niall Ferguson Cites Flawed Evidence To Stoke Regulation FearsJune 19, 2013 12:16 PM EDT ››› ALBERT KLEINE
Conservative author Niall Ferguson used discredited research to overstate the negative impact of regulations on the economy.
In an op-ed for The Wall Street Journal titled "The Regulated States of America," Ferguson, a Daily Beast contributor, claimed that the increase of regulations is holding back economic growth.
Ferguson's argument hinges upon the promotion of statistics compiled by the oil and pharmaceutical industry funded Competitive Enterprise Institute's (CEI) annual report on the cost of regulations. According to Ferguson, the report shows:
Excluding blank pages, the 2012 Federal Register - the official directory of regulation - today runs to 78,961 pages. Back in 1986 it was 44,812 pages. In 1936 it was just 2,620.
The cost of all this, [CEI's Cyde Wayne] Crews estimates, is $1.8 trillion annual - that's on top of the federal government's $3.5 trillion in outlays, so it is equivalent to an invisible 65% surcharge on your federal taxes, or nearly 12% of GDP.
The research that Ferguson cites, however, is inherently misleading and has been criticized by experts.
The way in which CEI tallies the overall burden of regulations -- counting the number of pages in the Federal Register -- is more focused on shock value than sound analysis. In an email correspondence with Media Matters, James Goodwin, a policy analyst at the Center for Progressive Reform, noted that CEI's focus on the pages in the Federal Register overstates regulatory burden:
Bad case law, "filter failure," and the explosion of analytical requirements have more to do with those numbers than do some alleged "overreaching and unaccountable bureaucracy."
Furthermore, Ferguson, like the CEI report, completely ignores any potential benefits that regulations contribute to the economy. According to the Office of Management and Budget (OMB), which calculates the costs and benefits of regulations, over the past 10 years major rules have provided a net positive benefit to the economy.
Ferguson's focus on the CEI report ultimately leads him to "wonder if all this could have anything to do with the fact that we still have nearly 12 million people out of work," a conclusion that is in direct contrast to economic evidence. Many economists have consistently cited lack of demand in the economy as the main contributor to slow growth - demand that is held back by reduced government spending.
Indeed, independent surveys support this position. According to an Economic Policy Institute (EPI) analysis, during the Obama presidency, businesses have reported poor sales as the single most important problem facing their business, while a smaller percentage of businesses named regulations as their most important issue. EPI's results are confirmed by surveys that find lack of customer demand to be the main hindrance to business growth and employment.