Expanded Environmental Regulation Will Not

¶ … Expanded environmental regulation will not build a more prosperous and competitive economy. In terms of economics, governments use regulations to guide activities, including the flow of capital. Regulations typically add to the cost of conducting certain activities, and in doing so affect the choices that businesses and consumers make. The added costs associated with regulations represent an economic burden. Costs reduce efficiency, and reduced economic efficiency ultimately leads to a lower level of economic output. The notion of building a more prosperous and competitive economy is a smokescreen.

The regulations would guide economic development into certain areas, by increasing the costs associated with competing activities. The beneficiaries of these policies require the policies, however, because they are not the most economically viable options. The underlying assumption behind these regulations, therefore, is that the government has a better sense of what is prosperous and competitive than does the free market. Ultimately, government policy does influence spending and economic development decisions. The existing policies, for example, may tacitly favor certain activities.

It could be argued that the new policies merely act as counterbalance to the policies already in existence. However, the question being addressed is strictly related to the impact of new policies. These new policies add costs to the business environment, which takes money out of the economy. The view could also be taken that the government does have a better read on what is required to build a more prosperous and competitive America than does the market.

The underlying assumption to that theory would be that the market is oriented too much to the short-term and not enough to the long-term. Therefore even if the government intervention reduces economic output in the short-term, the economy will see long-term benefits from the policies. This is a variation of the infant industry argument, which suggests that emerging industries need additional protections and that such protections will ultimately be paid for with a strong industry. However, to adopt such an assumption is essentially a gamble.

The government would, with the increased regulations, be betting on different technologies and industries, in the hopes that they would emerge in the future to be stronger than the existing ones. The tactics, however, are suspect. The infant industry argument is based on providing subsidies or protections from foreign competition -- direct harm does not come to domestic operators. In other words, there is no up-front cost to infant industry protections. By enacting regulations.