There is a good reason regulation makes it more expensive to open factories in the US: our regulations force companies to internalize the negative externalities their businesses create. China effectively subsidizes industry by forcing its citizens to bear the costs of pollution, injuries, etc, inherent in such activities. US regulation forces companies to bear some of these costs (hardly all of them).
In its retrospective study on the 1970 Clean Air Act, the EPA estimated that the benefit of pollution control over the 20 year period was on the order of $22 trillion. Relative to the "so-called 'no-control' case, an additional 205,000 Americans would have died prematurely and millions more would have suffered illnesses ranging from mild respiratory symptoms to heart disease, chronic bronchitis, asthma attacks, and other severe respiratory problems... the lack of Clean Air Act controls on the use of leaded gasoline would have resulted in major increases in child IQ loss and adult hypertension, heart disease, and stroke." Meanwhile, "the actual costs of achieving the pollution reductions observed over the 20 year period were $523 billion, a small fraction of the estimated monetary benefits."
What's good for business isn't necessarily good for the economy. The things that businessmen push for: deregulation, limitations on tort liability, etc, create more in costs to society then they create in benefits to businesses. Indeed, our measurements of things like GDP are so fundamentally flawed that they encourage politicians to adopt such measures. If a factory's poisonous emissions causes you to have lung problems, that doesn't count against GDP, but when you seek medical attention for those problems GDP goes up!
In theory, sure, a disinterested regulator would ensure that the cost of polluting was higher than the cost of not polluting. (Another solution to this problem is via property right enforcement, by the owners of the nearby polluted properties that share airspace/water table with the polluter).
But in practice the EPA is hardly a disinterested party when it comes to publishing studies on its own cost effectiveness. It exists to increase its budget and scope, just like all other agencies, but has no check on its behavior. Its officials are not elected, cannot be fired, and are effectively invisible to the public. Moreover, opposition to EPA malfeasance/corruption is often caricatured as opposition to clean air and clean water itself.
As an example of regulatory pathology, consider that the EPA is giving grants and instruction manuals to NGOs, telling them how to sue the agency into expanding its powers.
The EPA even tacitly encourages such suits, going so
far as to pay for and promote a "Citizen's Guide" that,
among other things, explains how to sue the agency
under "citizen suit" provisions in environmental laws.
The guide's author — the Environmental Law Institute —
has received $9.9 million in EPA grants over the past
decade.
And, to top it off, critics say the EPA often ends up
paying the groups' legal fees under the Equal Access to
Justice Act.
What's going on? "The EPA isn't harmed by these suits,"
said Jeffrey Holmstead, who was an EPA official during
the Bush administration. "Often the suits involve things
the EPA wants to do anyway. By inviting a lawsuit and
then signing a consent decree, the agency gets legal
cover from political heat."
Most people have never read an expose on the EPA; they think of them as the "good guys" who protect us from the evil polluters. What's funny is that we can see through this kind of logic when the normal police invoke it to justify any action in the pursuit of common criminals, but not when the environmental police do so -- and the EPA is most certainly a branch of the police, with the power to raid, fine, and seize property.
This sounds bad in a soundbite, but this is the way the system works.
Consider this loose example: suppose 2 people get into a fight. One guy really beats up another guy, and the cops are called. If the recipient refuses to press charges, the cops can't do anything.
Similarly, a lot of government agencies can't proactively do something, until someone sues them. By getting sued, they get to act on the complaint, and the legal opinion can be used to justify similar action elsewhere.
There is no nefarious purpose here; it is disingenuous to claim so. Yes, government agencies have issues galore; but by conflating the necessary with the rest, we fail to identify the real problems.
Argh! Why the downvotes? This is the way the government works! A government agency often needs a legal cover to do something; so it asks the citizens to sue them in court, so that it will have the legal cover. It can't sue itself, because it can't be the plaintiff and the defendant at the same time.
> In its retrospective study on the 1970 Clean Air Act, the EPA estimated that the benefit of pollution control over the 20 year period was on the order of $22 trillion.
$22T/20 years is over $1T/year. US GDP in 1990 was under $6T. US GDP in 1970 was just over $1T.
> the lack of Clean Air Act controls on the use of leaded gasoline would have resulted in major increases in child IQ loss
Oh really? Why would leaded gas in 1980 cause more problems than leaded gas in 1950?
> Meanwhile, "the actual costs of achieving the pollution reductions observed over the 20 year period were $523 billion, a small fraction of the estimated monetary benefits."
Just as the benefits are not limited to the money not spent on medical care, the money spent on pollution controls are not the only costs.
I hear what you are saying, but I think you're mixing units. Since the study is accounting for things that are not accounted for in GDP, It doesn't seem to make much sense to compare the dollar figure reached in terms of GDP. If GDP devalues human health as part of its basic assumptions, an analysis that does not devalue human health will come to different numbers. It's almost a tautology.
There is a good reason regulation makes it more expensive to open factories in the US: our regulations force companies to internalize the negative externalities their businesses create. China effectively subsidizes industry by forcing its citizens to bear the costs of pollution, injuries, etc, inherent in such activities. US regulation forces companies to bear some of these costs (hardly all of them).
In its retrospective study on the 1970 Clean Air Act, the EPA estimated that the benefit of pollution control over the 20 year period was on the order of $22 trillion. Relative to the "so-called 'no-control' case, an additional 205,000 Americans would have died prematurely and millions more would have suffered illnesses ranging from mild respiratory symptoms to heart disease, chronic bronchitis, asthma attacks, and other severe respiratory problems... the lack of Clean Air Act controls on the use of leaded gasoline would have resulted in major increases in child IQ loss and adult hypertension, heart disease, and stroke." Meanwhile, "the actual costs of achieving the pollution reductions observed over the 20 year period were $523 billion, a small fraction of the estimated monetary benefits."
What's good for business isn't necessarily good for the economy. The things that businessmen push for: deregulation, limitations on tort liability, etc, create more in costs to society then they create in benefits to businesses. Indeed, our measurements of things like GDP are so fundamentally flawed that they encourage politicians to adopt such measures. If a factory's poisonous emissions causes you to have lung problems, that doesn't count against GDP, but when you seek medical attention for those problems GDP goes up!