Published July 01, 2011
“Keep in mind,” President Obama cautioned reporters halfway through his hour-long news conference Wednesday morning, “that the business community is always complaining about regulations. When unemployment is at 3 percent and they're making record profits, they're going to still complain about regulations because, frankly, they want to be able to do whatever they think is going to maximize their profits.”
No reporters followed up on these remarks – in particular to question whether the nation’s chief executive really meant to suggest that the nation’s corporate chief executives, if unchecked by government, would eschew all ethical scruple to “do whatever they think is going to maximize their profits.”
In the same set of remarks, Obama credited his administration with having undertaken an “unprecedented” effort to review the country’s regulatory structure – including both proposed rules and those “already on the books” – to determine, as the president put it, whether there is “a tangle of regulations out there that are preventing businesses from growing and expanding as quickly as they should.”
A bit later, while discussing Boeing’s battle with the National Labor Relations Board over the site of a new plant, Obama said he hopes “everybody steps back for a second and says, look, if jobs are being created here in the United States, let’s make sure that we’re encouraging that…at a time when we’re competing against Germany and China and other countries that want to sell goods all around the world.”
Dan Danner, president and chief executive officer of the National Federation of Independent Business, agreed on the need to develop federal policies in a way that enables America to compete with foreign economies. “There's no question today that almost every business is global,” Danner told Fox News. “So the whole question about outsourcing is: Where's the best business environment? I'm sure that corporations don't sit around…and think, ‘Where can we make our investments in other parts of the world, just because we want to?’ It's all about the business environment, the taxes and regulations.”
Yet in 2010 – and for the fifth consecutive year – the World Bank’s annual “Doing Business” survey, which ranks 183 economies on key aspects of regulation for domestic firms, found Singapore to be the world’s friendliest regulatory environment, followed by Hong Kong, New Zealand, the United Kingdom and the United States. This fifth-place ranking represented a decline for the U.S., which in the 2009 survey ranked third – and it showed America bucking a worldwide trend.
That trend has seen 85 percent of the world’s economies take steps over the last five years to make it easier for local entrepreneurs to operate. Yet separate studies by the World Bank and the Global Entrepreneurship Monitor both concluded that American entrepreneurs faced more start-up red tape in 2007 than they did in 2003.
Add to that the tens of thousands of pages of regulations still being written as a consequence of the Obama administration’s enactment of legislative reforms to the health care and financial service sectors, and the American regulatory structure would appear only to be growing exponentially.
“If you had asked me this ten years ago, I would’ve told you, ‘America is the place to start a business,’” said Veronique de Rugy, an economist at George Mason University’s Mercatus Center. “It’s not true anymore today. I think the gap, basically, between the European countries and America has shrunk dramatically in the last ten years, and in particular in the last three years. I cannot tell you how badly we will fare once the financial regulation that was passed last year will all have been implemented.”
Among the world’s fastest surging economies are those of the so-called BRIC countries: Brazil, Russia, India, and China. Those last two nations rank among the top forty most-improved countries, in terms of their regulatory climate, over the last five years.
“They embarked on a program of deregulation, but they still have a lot of it left, so I suspect that they will continue to be on a deregulatory track,” said Martin Baily, a senior fellow with the Brookings Institution who formerly served as chairman of the White House Council of Economic Advisers under President Clinton. “It's not that the U.S. gets terrible grades on this, relative to other countries; it's that we need to do better….Remember, if you're thinking of investing, you may look at China and you say, ‘Well, there's some regulatory problems, there's some intellectual property problems; but boy, this market is growing at 10 percent a year. I'm going to invest [there].’ Whereas the U.S. right now is hardly growing at all…China and India start to look like very attractive markets.”
Economists across the political spectrum, when contacted by Fox News, agreed: For the U.S. economy to prevail in its competition against the world’s nearly 200 foreign economies, a fierce battle over scarce resources and precious human capital, regulations themselves must be tightly regulated. To be sure, many rules on the books remain vital: cases in point range from child labor laws to the licensing of doctors and attorneys.
But analysts urged that regulations be narrowly tailored to address specific problems, and made to go away if and when those problems do.