A common political argument is that government regulation hinders the healthy functioning of markets. According to the Center for Progressive Reform, a common figure cited is that regulation costs the economy an annual $1.75 trillion, which is a vastly unreliable and exaggerated number. What’s more, that argument doesn’t highlight the benefits of regulation to society. We know that the economic crisis, precipitated by weakening of key regulatory measures like the Glass-Steagall Act, imposed devastating costs. Likewise, the explosion of BP’s Deepwater Horizon, causing the largest oil spill in US history, could have been prevented had better regulatory and enforcement measures been in place.
For example, the table below, published by the Center for Progressive Reform, shows that the monetary value of regulatory benefits by demonstrating what happens when no regulation is in place or existing rules are weak or not enforced. In the case of the BP oil spill, between $11 and $100 billion could have been saved if proper regulatory measures had been in place, not to mention the value of precious lives lost and irreparable damage to the environment avoided.
When asked, Americans tend not to like the idea of regulation in the abstract, a sentiment that regulatory opponents have well-exploited. But when Americans are asked about specific kinds of regulation—controls like greenhouse gas emissions and stricter regulations on oil drilling—a significant number are supportive.
Created by Member Economist Sue Holmberg
October 2011
Source: Shapiro, Sidney, Ruth Ruttenberg, and James Goodwin. “Saving Lives, Preserving the Environment, Growing the Economy: The Truth About Regulation.” Center for Progressive Reform.
