Regulations and Small Business

A theme of President Obama’s State of the Union speech tomorrow is the idea that we need to make America more competitive in the global economy. To help acheive this end, Obama recently named Jeff Immelt, chairman and CEO of General Electric, to head his Council on Jobs and Competitiveness. Unfortunately, Immelt more fits the mold of a political rent-seeker rather than a successful businessman who thrives on competition.

The Council on Jobs and Competitiveness will be nothing more than a bland PR effort which will do little to help make our economy more competitive. Obama’s op-ed last week in the Wall Street Journal brought a promise of ending costly, ineffective regulations and subjecting new regulations to a more-honest cost/benefit analysis. CEI’s Wayne Crews and Ryan Young immediately pointed out that similar executive orders were made in previous administrations with no actual results. It’s also worth noting that Obama’s best example of an ineffective regulation dealt with saccharin — certainly a dumb regulation but also very small in the grand scheme of things.

Today the WSJ notes that some of the more onerous regulatory bodies are quite pleased with their efforts and do not share Obama’s skepticism of the cost effectiveness of regulatory efforts:

No sooner had Mr. Obama told the bureaucracies to subject all regulations to a cost-benefit test than the bureaucrats began telling reporters that they are already a model of modern efficiency, thank you very much. Among many others, the Environmental Protection Agency said in a statement that it was “confident” it wouldn’t need to alter a single current or pending rule. “In fact, EPA’s rules consistently yield billions in cost savings that make them among the most cost-effective in the government.”

This story is from August of 2010, but it serves as a great example of clueless bureaucrats intervening in our economy and stopping economic growth. The owner of a construction business received a surprise visit from OSHA and was threatened with $1050 in fines if he didn’t go through the costly process of appealing them:

He said the inspector had written several citations. The first thing she told him was his scaffold wasn’t level. He said he pulled out his level and put it on the scaffold to show that the scaffold was level. He said the inspector then wrote down the brand name of the level, as if there might be something wrong with his equipment.

“Truth is, you could have put a horse on that scaffold,” Heffernan said.

He said he offered to let the inspector walk on the scaffold, but she declined and said she was afraid of heights.

The inspector told him his nephew needed a helmet and a safety harness.

“We have safety harnesses. If the job requires it, we wear them,” Heffernan said. “But my nephew was only about 11 feet off the ground. I told the inspector I didn’t know what I was supposed to attach the harness to. She told me I could rent a lift and run the main pole above the chimney and have the safety line from that hooked to my nephew. A lift costs about $750 a day. It made no sense.”

It seems clear that the inspector didn’t understand what she was supposed to be in charge of regulating. Now Heffernan must go through a costly and complicated appeal process. He might even face increased insurance requirements because of the fines despite his perfect safety record. Again, this a minor problem compared to the vast U.S. economy, but there are undoubtedly thousands of these cases out there every year.