Last updated on 2011.11.27
Rep. Kristi Noem likes to parrot the party line on "job-killing" regulations. She claims the EPA is "out to do us all in... and close all our businesses."
She can find plenty of business leaders who will echo that belief before Congress... but those same business leaders tell a completely different story when speaking to the Securities and Exchange Commission and investors:
"As an industry, we have said this before, we face a potential regulatory train wreck," Anthony Earley Jr., then the executive chairman of DTE Energy in Michigan, told a House committee on April 15. "Without the right policy, we could be headed for disaster."
...But in its quarterly report to the SEC, Detroit-based DTE, which serves 3 million utility customers in Michigan, said that it was "reviewing potential impacts of the proposed and recently finalized rules, but is not able to quantify the financial impact ... at this time."
...Another congressional witness, Jim Pearce of chemical company FMC Corp., told a House hearing last Feb. 9: "The current U.S. approach to regulating greenhouse gases ... will lead U.S. natural soda ash producers to lose significant business to our offshore rivals...." Soda ash is used to produce glass, and is a major component of the company's business.
But in its annual report covering 2010 and submitted to the SEC 13 days after the testimony, the company said it was "premature to make any estimate of the costs of complying with un-enacted federal climate change legislation, or as yet un-implemented federal regulations in the United States.
...James Rubright, CEO of Rock-Tenn Co., a Norcross, Ga.-based producer of corrugated-and-consumer packaging, told a House panel in September that a variety of EPA, job safety and chemical security regulations would require "significant capital investment" -- money that "otherwise go to growth in manufacturing capacity and the attendant production of jobs."
But a month before his testimony-- and three months after EPA withdrew its boiler proposal -- Rock-Tenn told the SEC that "future compliance with these environmental laws and regulations will not have a material adverse effect on our results or operations, financial condition or cash flows" [Larry Margasak, "Clean Air, Water Rules Spark Different Responses," AP via Boston Globe, 2011.11.26].
I suppose the speech teacher in me can't fault the above execs too hard for telling different stories. They are simply tailoring their message to different audiences. When they speak to politicians who could change the rules in their favor and set our environmental progress back 40 years, they cry "train wreck!" When they turn to speak to the SEC and investors, they purr assurances that your capital is secure and sure to grow in their pockets.
Now let's really confuse Kristi and get some CEOs to go on the record and admit that regulations create jobs.
And, of course, when they are talking to their customers the companies brag that their environmental programs that go way beyond what regulations require. This link from DTE is instructive.
http://www.dteenergy.com/dteEnergyCompany/environment/climateChange/climateChange.html
Is it any wonder that industry shills are never believed? DTE brags about investing in climate change solutions (such as carbon exchanges) in order to market their dirty energy, then decry regulations that would have them do what they are bragging about doing.
In my opinion, regulations don't deserve direct blame for the skittishness that now pervades the business scene. The problem lies in the fact that nobody knows what those regulations will look like in one, two, or five years.
What will happen to the tax code? Will the Bush tax cuts expire, or not? What about the estate tax? What about the 9-9-9 scheme? (I don't think Cain would get that monstrosity even if we elected him President in a landslide, thank God.)
It's not all our government's fault, either. What will the housing market do? It depends on who buys what, and how they do it. What will happen in Europe, China, or the Middle East? It depends on the way a Martian butterfly takes off from a certain rock outside Los Deimos tomorrow at sunrise (Mars time).
Couple the uncertainty with a growing cynicism that under the Republicans, "human exploits human," but under the Democrats it's the other way around; that we have a choice only between crony capitalism or crony socialism; put all of that rubbish together, and the world would enjoy a real miracle if we were not in a recession.
In fact, I think the fact that we aren't in a full-blown depression right now constitutes a minor miracle in itself. I'm so concerned about the prospect of social meltdown that I've seriously thought about selling everything I have (if I can) and running off to Alaska where I'll see Russia from my yurt.
But Stan, have we ever known what regulations or the housing market or anything else would look like 1-5 years out? Hasn't business always operated in a world of uncertainty? Is today's uncertainty worse than yesterday's... or are there just more relevant variables now about which to be uncertain?
In my opinion, today's uncertainty is worse than yesterday's, and more variables are subject to that uncertainty. So, Cory, in answer to your question, I would say "Both."
We can't get rid of a problem by denying every suggested cause. Corporations are hoarding cash. If uncertainty is not the reason, what is? A sudden surge of greed? Then why that surge?
Along a different route in the same region, I have an idea for a single, simple regulation that could produce thousands of new jobs.
Let's outlaw snow plows in our cities and towns, and instead, hire people to manually shovel the streets after every snowstorm. We'd reduce air pollution and fossil-fuel consumption a bit. Sales of snow shovels would skyrocket. And it'd be quaint, too, eh?
Then along came the following take ...
http://www.cnbc.com/id/45436579
Don't know enough about banking to comment on this article, but we might want to get ready for another round of credit tightening and cash hoarding.
Not having cable, this Dick Bove character is as alien to me as those nice kids on Jersey Shore. But a casual read of his comments in the article you cite, Stan, as well as a glance at these charts, suggests Bove is just a cheerleader for big banks and the laissez-faire approach that allowed the banks to drag us into the last recession.
I just wish I had cash to hoard!
It's also interesting that in deeper surveys of business and economists that they blow the whole uncertainty argument out of the discussion.
Here's the first from a Wall Street Journal poll of economists:
WSJ Survey: Lack of Demand, Not Uncertainty, Keeps Hiring Down
http://www.nationaljournal.com/economy/wsj-survey-lack-of-demand-not-uncertainty-keeps-hiring-down-20110718
The second that goes into even greater depth mirrors the WSJ story and gives a more thoughtful look by economists at the Economics Policy Institute.
Regulatory uncertainty: A phony explanation for our jobs problem
http://www.epi.org/publication/regulatory-uncertainty-phony-explanation/
Jana, you are one linky lady. I like that.