The country’s economic outlook is, in general, very good. The stock market broke records in 2017. The nation’s unemployment rate stands at 4 percent and appears to be falling, with so-called discouraged workers (those who had given up looking for employment) now reentering the workforce. If the last quarter of 2017 looks like the second and third quarters, the U.S. economy will have bested 3 percent for three consecutive quarters—the first time that’s happened since the George W. Bush years.
We’ve never liked the tendency to attribute good or bad economic news to whoever happens to be president. The people and companies of the private sector achieve prosperity, not politicians and bureaucratic planners. Even so, the Trump administration deserves credit for aggressively undoing some of the Obama administration’s most debilitating regulations and so at least making an economic boom more likely. Through executive orders, blocking new regulations through the Congressional Review Act, and directing agency heads to roll back the most egregious regulations, the president has made deregulation his administration’s principal economic policy.
Is there any causal connection between substantial deregulation and economic growth? For conservatives, the question hardly needs to be asked. Of course there is. The nation’s elite progressive policymakers and commentators, however, aren’t so easily persuaded, so invested are they in the belief that regulating economic activity in the name of “public safety” or “fairness” or “equality” must always be a virtuous thing. The most they’ll allow is that business leaders think deregulation is a good thing and so may be more inclined to spend and take risks. Consider for example this lovely pair of sentences from Monday’s New York Times: “The evidence is weak that regulation actually reduces economic activity or that deregulation stimulates it. But business executives are largely convinced that the cost of complying with rules diverts money that could be invested elsewhere.”
Who are you going to believe—people who run companies and invest their own and their shareholders’ money, or the academics and think tank gurus consulted by the Times? We’ll put our money on the former.
Wisecracking aside, it’s true that the administration’s deregulatory efforts have not yet had time to affect the economy one way or another. Yet it’s also true—undeniably—that complying with regulations costs lots of money. One example: Many companies hire one or several “compliance officers” to guide them through the federal regulatory code. A recent report published by the president’s Council of Economic Advisers estimates that businesses spent $16.8 billion on compliance officers’ salaries in 2015—and that doesn’t account for the cost of paperwork, the cost to companies that can’t afford compliance officers, and the losses incurred by companies whose clients move to less heavily regulated markets. The report is worth reading.
Granted, the economy’s newfound vigor is not the result of President Trump’s wise policies. But his administration is at least smart enough to remove the impediments.
