January 18, 2011 The Pump Handle 8Comment

by Rena Steinzor, cross-posted from CPR Blog

Sixteen months ago, President Obama stood in the well of Congress and issued a ringing call for a progressive vision of government. Working to persuade Members of Congress to adopt health care reform, he said that

large-heartedness…is part of the American character.” Our ability to stand in other people’s shoes. A recognition that we are all in this together; that when fortune turns against one of us, others are there to lend a helping hand.”

Many took comfort from that vision, the first avowedly affirmative one we had heard from a President about the government he leads in many a year.

Since then, much of the President’s domestic agenda has been adopted, and a mid-term election “shellacking” has intervened. And now, President Obama, with the 2012 election drawing ever nearer, is embracing a far less generous vision. In an op-ed on the opinion pages of today’s Wall Street Journal, truly the belly of the conservative beast, the President embraces a frame for the coming discussion about the role of regulation in society that is right out of the Republican hymnal, calling for “balance” between safety and economic growth, and bemoaning regulations that sometimes

“plac[e] unreasonable burdens on business–burdens that have stifled innovation and have had a chilling effect on growth and jobs.”

He also used the op-ed to announce a new initiative

“to review outdated regulations that stifle job creation and make our economy less competitive.”

By casting the discussion in those terms, the President swallows the GOP’s frame for the debate hook, line, and sinker.

If you listen carefully, you might hear the voices of disbelief and anguish from the families of the 11 workers killed in the Deepwater Horizon disaster, the 29 workers whose lives were extinguished at the Big Branch mine, and the nine who died after eating peanut butter crackers and similar products infected by salmonella. How about the people who knew the uncounted tens of thousands of others who were given cancer by airborne toxics at work or in the neighborhood, experienced devastating headaches because Chinese manufacturers put sulfur compounds in their drywall and no one checked the product as it crossed our borders, or were crippled by repetitive movements in a slaughterhouse or a poultry processing plant, all on President Obama’s watch? The families, friends, and co-workers of these victims of under-regulation and under-enforcement might conclude that the United States is reverting to a place where the government most definitely does not protect people who can’t protect themselves. Sure, they think to themselves as they read about the president’s new détente initiative with big business, we all need jobs, but aren’t all those billions in profits and executive bonuses enough for the business sector? Didn’t the government bailouts of the big banks do the trick?

Large corporations were at the bottom of all of the human damage listed above, not because they are intrinsically evil but because they cannot be trusted to regulate themselves. And given the current state of regulatory dysfunction at the agencies founded to protect the public, caused by a noxious mix of underfunding, political attacks, and lack of effective enforcement authority, that’s exactly what they’re doing way too much, almost everywhere you look.

To be sure, public anger and distrust, coupled with massive campaign contributions from corporate and other sources, translated into Republican triumph electorally, and the big companies who brought us the Gulf spill, the Big Branch mine collapse, tainted food, and runaway cars have now come to collect. But Barack Obama is a President from the party that should know better, the evidence of which is that he has appointed great people to lead the very agencies that so badly need rescuing after eight years of George W. Bush’s concerted efforts to de-fund and de-fang them. Instead, the President’s newly stated position diminishes EPA’s Lisa Jackson, FDA’s Margaret Hamburg, and OSHA’s David Michaels, siding instead with his regulatory czar, Cass Sunstein, who has steadily pushed to issue an executive order that throws a net over his colleagues rather than helping them do their jobs.

The principal example of outdated regulations that the President cites is the listing of saccharin as a hazardous waste. EPA removed saccharin from the list recently, a decade after the science supporting the move came together. But in the intervening years, it’s not as if there’s evidence the regulation has been costing us jobs. Companies weren’t told to dig special saccharin waste dumps to dispose of the stuff, after all. So it’s business friendly rhetoric that has the unfortunate by-product of making the agencies sound more than a little silly, but it doesn’t make the case that outdated regulations are costing us jobs. Forcing beleaguered agencies to “look back” and find more saccharin examples will have real costs, though, because they are already pushed to their limits by funding shortfalls that give them, in many cases, the same budgets in real dollars as they had in the mid-1980’s, when the White House also was hounding them to control themselves. Does the President really intend regulators to freeze-frame efforts to solve public health crises that abound all around them so that they can engage in a draining search to placate companies already rushing to Republicans in Congress with regulatory “hit lists”?

As for the argument that we need to loosen regulation in order to create jobs, the believers in this superficially appealing bit of dogma have yet to cite research showing that regulations are slowing the economic recovery. They just serve up the assertion, in part to distract us from the hard reality that it was deregulatory fervor that got us into this mess in the first place. And while President Obama may not accept it, he’s apparently willing to let the debate be conducted in those terms.

Rena Steinzor, CPR President; Professor of Law, University of Maryland School of Law.

8 thoughts on “President Obama moves to the right on regulation; appeasing business has real life costs

  1. You make a pretty selective reading of Obama’s op-ed. The first several paragraphs are a defense of regulations that are “necessary to protect the public against threats to our health and safety and to safeguard people and businesses from abuse”, and points to the financial meltdown as a consequence of too little regulation. He also says of rules designed to protect our health, safety and the environment, “the benefits of these regulations exceed their costs by billions of dollars.” By signing this modest and sensible executive order, he effectively undercuts the GOP’s plans to run a slash-and-burn campaign through our regulatory framework. I say, well done, my prez.

  2. Large corporations were at the bottom of all of the human damage listed above, not because they are intrinsically evil but because they cannot be trusted to regulate themselves.

    If large corporations “cannot be trusted to regulate themselves,” what more would they have to do or not do for you to consider them to be “intrinsically evil”?

  3. dd@2:
    I’d say that there’s a difference between “intrinsically evil” and “blindly self-interested to the exclusion of all other factors”. Neither is good, but the big corporations don’t deliberately set out to injure and kill people (which would be evil); instead, they regard those injuries and deaths as an acceptable price to be paid for a small increase in their marginal rate of profit (which is unacceptable blind self-interest). It’s a bit like the difference between setting fire to a neighbour’s house yourself and not reporting it when someone else does so.

  4. @darwinsdog

    Are you proposing that a sufficient criterion for an entity or organization to be intrinsically evil is for it to be unable to regulate itself?

    Under that definition, then virtually any enterprise with human involvement from a little league baseball team to the branches of our government would have to be considered so.

  5. Under that definition, then virtually any enterprise with human involvement.. ..would have to be considered so.

    I won’t argue to the contrary, Druc.

    I don’t really care to get into a philosophical debate over what “evil” consists of. I don’t believe in metaphysical evil but would say that “evil is as evil does,” rather. If the outcome is that people are injured or killed, or the environment degraded, or other harm is incurred, to my mind the point is moot whether said harm results from “intrinsic evil” or from an agent being “blindly self-interested to the exclusion of all other factors.” Accordingly, to place corporate profit above the welfare of workers, consumers, or the environment is patently functionally EVIL.

  6. “By signing this modest and sensible executive order, he effectively undercuts the GOP’s plans to run a slash-and-burn campaign through our regulatory framework.”

    Tomasyn, I hope you’re right about that. But Obama seems to have a pattern of giving things to the GOP without going through negotiation to get something in return – e.g., declaring a federal-employee pay freeze. It would be pretty easy for Republicans to ignore this and go right ahead with what they were planning to do anyway.

  7. @darwinsdog

    While I am sure that there are examples of corporate entities engaged in the immoral, and depending on the circumstances, illegal, tradeoffs you posit, in the fields I am familiar with I believe them to be in the tiny minority. I think a more accurate characterization of corporate behavior than “blindly self-interested to the exclusion of all other factors” would be “biased towards self interest in a way that underweights other factors relative to their true significance.”

    Even when adverse consequences arise, it is much more difficult to characterize the latter as “evil” rather than a negative aspect of corporate (or more broadly human) behavior that we should seek to minimize the effect of (through laws, regulations, liability, etc.).

    To use one example I am familiar with, vaccine manufacturers have been frequently demonized (rightly or wrongly). Their products have had tremendous positive benefits for individuals and society, but have undoubtedly seriously and irreversibly harmed a relatively small number of people. To offer a very simplistic hypothetical dilemma, vaccines often exhibit an inverse correlation between efficacy and safety (i.e., often a more immunogenic vaccine will exhibit a higher incidence of side effects). This is one hypothesis for why the incidence of whooping cough has risen dramatically, even in immunized populations (introduction of a putatively safer, but possibly less effective vaccine).

    As a hypothetical, a company is trying to decide which of its vaccine candidates to bring forward into late stage human testing. The company estimates that vaccine candidate #1 will have 90% efficacy and 0.0001% frequency of serious side effects whereas candidate #2 is 80% efficacious with 0.00005% frequency of serious side effects. Under these circumstances, what set of principles should guide their decision making process and how do they avoid being evil?

    Is it evil for them to pick #1, at least in part, because the clinical trial to prove efficacy will be smaller and less expensive (but more people will have side effects)?

    Is it evil to pick #1, at least in part, because a competitor is also developing a vaccine and they are concerned about relative effectiveness in the marketplace?

    Is it evil if the true side effect frequency of #1 ends up being 0.0005%, and they discounted early reports that suggested it might be higher than their initial estimate? – What if the true efficacy only ends up being 85%?

    Is it evil if they pick #2, at least in part, because they want to avoid lawsuits arising from those that suffer side effects (leaving more recipients vulnerable to disease)?

    Would it be evil to pick one or the other, at least in part, because it was cheaper to produce and would have a higher profit margin?

    How should the regulatory authorities approach this decision making process?

    This does not even get into all of the ethical dilemmas that will arise during product deployment (including pricing, use in the developing world, marketing, etc.), but at the end of the day they may be judged quite harshly regardless of which path they took because one can always argue with the relative prioritization. Moreover, the critiques will be made through the lens of 20/20 hindsight regarding the path that was taken and without the knowledge about the pitfalls in the path that was not taken.

    The reality is that a lot of these type of decisions are multifactorial and that there are no choices without a downside (as Google has found out trying to stay true to its “don’t be evil” pledge).

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