• Regulations Create Jobs? Give me a Break.

      An article in today's Washington Post questions whether regulations destroy jobs. Author Jia Lynn Yang writes,

      Some jobs are lost. Others are created.

      She cites workers installing scrubbers at coal plants. Not long ago, the NY Times wrote that Dodd-Frank was a jobs program for lawyers and accountants. This is also how Paul Krugman thinks.

      ... tighter ozone regulation would actually have created jobs: it would have forced firms to spend on upgrading or replacing equipment, helping to boost demand.

      But they fall prey to the "broken window" fallacy that Frederic Bastiat warned about. If a boy breaks a window, Keynesian economists would say he's creating jobs, since the owner of the window hires a glassmaker to fix the window. That creates work for glassmakers. But that work is just what is "seen." What is "unseen" is that the man who buys the new window has $100 fewer dollars to spend on something else. Maybe with the money he would have purchased shoes, giving the shoemaker more work. Similarly, what coal plants now must pay for scrubbers would have been used to invest in something else.

      The truth is that regulations kill jobs.

      The Clean Air Act provides a clear example. The Act's rules were toughest on American counties with the most pollution. Economist Michael Greenstone found that those counties lost more jobs than other counties. They lost:

      ... approximately 590,000 jobs, $37 billion in capital stock, and $75 billion (1987$) of output in pollution intensive industries.

      To be clear, some environmental regulations are necessary. It's worth losing some jobs to reduce pollution. But let's not kid ourselves by claiming that it also creates jobs.

      And the federal government has 160,000 pages of other regulations.

      Give me a break.