The Politics of False Correlation – Regulations and Job Growth

This is an excellent example of garbage journalism. You have Greta Van Susteren arguing that small businesses are being strangled by overwhelming regulations. Okay. Where’s the data? Instead of arguing the data, Greta Van Susteren simply tells Paul Krugman to ask small businesses why they aren’t hiring. What’s wrong with that? What is wrong with simply asking a business owner about his business behaviors? Well, most of the time, business owners have not sat down and thought about why they do the things that they do. Secondly, many business owners do not delineate between federal, state and local regulations. They see this as all – government regulations. Finally, I should add that Americans are terrible at explaining why we embrace certain behaviors.

From the Economic Policy Institute:

The most common general studies are of environmental regulations, and these have consistently failed to find significant negative employment effects. Moreover, studies suggesting that regulations have broad negative effects on the economy offer little persuasive evidence.

Some well-executed studies have found that certain regulations led to job losses in particular areas, but most studies of various industries suggest that regulations had either a close to neutral or small positive effect on employment levels.

The problem with our economy is not some mysterious “regulations” that are holding our economy hostage. The problem with our economy is a lack of demand. Consumers are not spending. There’s overwhelming data to support this. Simply put, there’s a large number of consumers who don’t have a job. These consumers are not spending. There are large numbers of Americans who are living with economic uncertainty. They may only have part-time work. They may be working at a company at which they have seen their fellow coworkers get laid off. This atmosphere will cause most of us to be apprehensive about spending. We really and truly don’t need any mysterious “regulations” to explain our economic woes.