Taking a Look at the State of Trump’s Deregulation Efforts

 

When the Trump White House talks about boosting economic growth, it’s not all tax cuts, tax cuts, tax cuts. Officials also mention the administration’s ongoing deregulatory push as a big part of why Trumponomics will turn a Two Percent Economy into a Three Percent or Four Percent Economy. President Trump himself has cited deregulation as one of his biggest accomplishments so far.

But a new analysis by Bloomberg gives reason for skepticism, at least if you define “deregulation” as actually, you know, removing regulations currently in effect. Not much of that seems to be happening yet. “Only a handful of regulations have actually been taken off the books,” Bloomberg finds.

Rather, what Team Trump apparently means by deregulation is more of a regulatory pause. The Trump administration claims, for instance, that it has withdrawn 469 pending regulations. But of those, Bloomberg finds, 42 percent were “as good as dead already” in that the Obama administration had no plans to implement them.

On the other hand, the administration does seem to be successfully slow-walking the adoption of new rules through its regulation-oversight arm, the Office of Information and Regulatory Affairs, as the above chart shows. And in an October analysis, The Economist declared: “The flow of new rules is suddenly a dribble. Since Mr Trump was inaugurated the number of regulatory restrictions has grown at about two-fifths of the usual speed.”

And as the newspaper goes on to note, rule-making under Trump is almost certainly less than it would have been under a Hillary Clinton administration. It’s also worth noting that a pretty big event in deregulation is likely to happen later this week when the FCC is expected to repeal “net neutrality” Internet rules put in place during the Obama years.

Still, if the economy’s sluggish growth is partly the result of regulatory burden, it is puzzling to see how merely not making the burden worse is already a big boost for growth.

Then there’s this: Is the sort of deregulation that Trump and the Republicans have been discussing really the sort that will boost growth? Among the areas that come to mind are land-use regulation, labor market regulation, and intellectual property. These issues are the focus of the book The Captured Economy, whose authors, Brink Lindsey and Steven Telles, I recently interviewed on my podcast. (Check back for transcripts later this week.)

As it happens, there is a new NBER working paper on one harmful form of labor market regulation, occupational licensing rules. From “Is Occupational Licensing a Barrier to Interstate Migration?” by Janna Johnson and Morris Kleiner: “Based on our results, we estimate that the rise in occupational licensing can explain part of the documented decline in interstate migration and job transitions in the United States.”

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  1. James Gawron Thatcher
    James Gawron
    @JamesGawron

    JimP,

    This country got started on a few slogans. One of them was “No Taxation Without Representation”. This acknowledged the fact that the power to tax was the power to destroy. Our present situation requires us to grasp that our regulatory structure has become so extensive and so powerful that truly the power to regulate has become the new power to destroy.

    Trump is cutting the Gordian knot of regulation and freeing the most dynamic economy the world has ever seen. Very Cool.

    Regards,

    Jim

    • #1
  2. James Golden Inactive
    James Golden
    @JGolden

    I’ve thought about this too, and while I haven’t kept track of the actual regulations coming and going, it has seemed to me that the great deregulation effort has been more noise than actual results so far.  But I also don’t think we should underestimate the importance of even just a slowdown in the increase of new regulations.  Businesses hate uncertainty, and it is less likely (for the time-being at least) that huge new disruptive laws like ObamaCare or Dodd-Frank will come onto the books, along with the massive numbers of regulations that accompany them.

    I am not an economist, but I don’t think we are anywhere close to being able to quantify just how much credit to give a President for a good or bad economy.  I do think we can get a sense of it and that is fair to give Trump’s administration some credit and Obama’s administration some blame.  But the exact amount of credit and blame we should assign cannot be calculated.

    • #2
  3. DocJay Inactive
    DocJay
    @DocJay

    You just baffle me.

    • #3
  4. Bishop Wash Member
    Bishop Wash
    @BishopWash

    James Golden (View Comment):
    I am not an economist, but I don’t think we are anywhere close to being able to quantify just how much credit to give a President for a good or bad economy.

    Obama seems to have it figured out. During his eight years, the poor economy was because of his predecessor. Now that the economy is doing better, he is out taking credit. Therefore, the economy is the result of the last guy. It won’t be Trump’s economy until the 2020s.

    • #4
  5. drlorentz Member
    drlorentz
    @drlorentz

    James Pethokoukis:But a new analysis by Bloomberg gives reason for skepticism, at least if you define “deregulation” as actually, you know, removing regulations currently in effect. Not much of that seems to be happening yet. “Only a handful of regulations have actually been taken off the books,” Bloomberg finds.

    The graph shows the policy is directionally correct. Furthermore, as the Bloomberg piece explains:

    …only a handful of regulations have actually been taken off the books. That’s due to laws that keep government policies from wildly swinging back and forth every time moving trucks show up at the White House.

    The ship of state can’t be turned on a dime. If the changes were more rapid, Mr. Pethokoukis would be telling us that the president is causing instability, which upsets markets and is bad for the economy.

    • #5
  6. Stina Member
    Stina
    @CM

    Bishop Wash (View Comment):

    James Golden (View Comment):
    I am not an economist, but I don’t think we are anywhere close to being able to quantify just how much credit to give a President for a good or bad economy.

    Obama seems to have it figured out. During his eight years, the poor economy was because of his predecessor. Now that the economy is doing better, he is out taking credit. Therefore, the economy is the result of the last guy. It won’t be Trump’s economy until the 2020s.

    I think this was the case once, but isn’t most of our modern economy tied up in investment futures and forecasts?

    That is the stock market, right?

    • #6
  7. drlorentz Member
    drlorentz
    @drlorentz

    Stina (View Comment):

    Bishop Wash (View Comment):

    James Golden (View Comment):
    I am not an economist, but I don’t think we are anywhere close to being able to quantify just how much credit to give a President for a good or bad economy.

    Obama seems to have it figured out. During his eight years, the poor economy was because of his predecessor. Now that the economy is doing better, he is out taking credit. Therefore, the economy is the result of the last guy. It won’t be Trump’s economy until the 2020s.

    I think this was the case once, but isn’t most of our modern economy tied up in investment futures and forecasts?

    That is the stock market, right?

    The stock market is a crowd-sourced prediction of the future. Surely, that’s more accurate than a few economists, except for the occasional crash. Well, even then.

    • #7
  8. Miffed White Male Member
    Miffed White Male
    @MiffedWhiteMale

    James Pethokoukis:And as the newspaper goes on to note, rule-making under Trump is almost certainly less than it would have been under a Hillary Clinton administration.

    Still, if the economy’s sluggish growth is partly the result of regulatory burden, it is puzzling to see how merely not making the burden worse is already a big boost for growth.

    You answered your own question before you asked it – it’s all about expectations.

     

    • #8

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