Do Regulations Cost or Make Jobs?

From the Bay Foundation's house blog: Obama's Regulatory Retreat Raises Question: Does EPA Kill Jobs?

...I am no economist, but in my limited experience, this rings true. Well designed, science-driven pollution regulations, more often than not, enrich the majority without any substantial harm to the regulated industries.

A great local example is the 2006 Maryland Health Air Act, an air pollution control law aimed at coal-fired power plants.

Power companies fought bitterly against the passage of this law, which is one of the strongest in the nation. The law is designed to reduce mercury emissions from Maryland power plants by 90 percent by 2013, sulfur dioxide emissions by 80 percent, and nitrogen oxide emissions by 75 percent.

The claim of the bill’s opponents was that the restrictions would bankrupt coal-fired power plants, destroying jobs for Maryland residents.

In fact, exactly the opposite happened. The passage of the Healthy Air Act forced the Atlanta-based Mirant company (for example) to invest $1.6 billion dollars in Maryland, building scrubbers and other air pollution control equipment on its three power plants in the state. The company hired hundreds of workers not only to build the new equipment at the Chalk Point, Morgantown, and Dickerson plants, but also to run the clean-air systems.

That meant more jobs -– not fewer -– for state residents because of pollution rules. That jobs benefit was on top of the cleaner air and water the law provided for all of us.

So that was regulations building jobs, not killing them.

What is your take on this whole debate? And what do you think about President Obama's decision on air pollution?

OK, here's my take: 

This might make sense if the money that was spent on pollution control would otherwise have been buried in the ground and forgotten.  But in real life, the money that went to pollution control either came from profits or from rate payers.  The reduced profits would reduce the investment in other ways (investments in other new machinery for the plant, reduced investment by investors.  Thus probably no net increase in jobs.  Increased rates means less money in the hand of ratepayer, who would spend that money on other consumer items.  Again probably no net increase in jobs.  The jobs lost for the cost of the pollution control that offsets the new jobs for installing the equipment are more diffuse, but no less real.

That's not to say that the regulations may or may not be worthwhile for their pollution, but we do ourselves a disservice if we lie to ourselves that pollution control have no real economic costs.

Down through time, pollution control spending has been very good to me, directly and indirectly, but I can't escape the knowledge that the money that funded my salary and studies was often extracted indirectly from the incomes of others who might have had things they would rather have spent that money on.