Editor's Note: Michael Mandel is the chief economic strategist at the Progressive Policy Institute.
By Michael Mandel – Special to CNN
If the White House really wants to send a message about jobs and investment, it needs to add a jobs tour stop in Washington, D.C. so President Obama can tell federal regulators that promoting jobs must be part of their agenda, too. Drawing attention to innovative companies and meeting workers around the country is a worthy endeavor, but it won’t do much good if regulators keep putting a low priority on investment and growth.
Back in January, the president signed an executive order telling rule-makers to weed out unnecessary or outdated regulations that interfered with growth. While defending regulations to protect safety, health and the environment, the president noted in a Wall Street Journal op-ed that regulations have sometimes created unreasonable burdens “that have stifled innovation and have had a chilling effect on growth and jobs.” His goal, the president said, was a less intrusive system that to “make our economy stronger and more competitive.”
But seven months later, unemployment remains unacceptably high and regulators continue to act in ways that discourage business investment and make it harder for even our strongest industries to create jobs. While regulators may have followed the letter of the executive order and rooted out a few old rules, some are ignoring the order’s spirit. Indeed, regulatory drag may be one reason why the past decade has seen few breakthrough products, outside of information technology and communications.
What’s more, some recent regulatory actions suggest that Washington may end up slowing innovation, investment and job creation in tech and communications as well. For example, AT&T invested $19.5 billion in the U.S in 2010, more than any other corporation, at a time when most companies are hoarding cash. But instead of applauding AT&T’s willingness to spend and create jobs, regulators at the Federal Communications Commission have recently decided to slow down their reviews of both AT&T’s bid to merge with T-Mobile and the company’s earlier proposal to buy wireless licenses from Qualcomm, which has been pending since February. The Commission’s slowdown pace adds uncertainty to the marketplace and keeps investment plans from moving forward.
Or consider the Obama Administration’s attitude towards Google, a company whose innovative accomplishments are the envy of the whole world. Unlike many other large American multinationals, Google is investing billions in the United States and creating jobs here as well. The just-announced acquisition of Motorola Mobility is likely to mean a bigger pile of Google cash invested on the development of new smart phones and software, adding to the U.S. lead in this area.
But instead of congratulating Google for its domestic investments in innovation, the Federal Trade Commission recently opened an antitrust inquiry into the company—an inquiry which is likely to intensify after the Motorola announcement. To antitrust regulators, the close scrutiny of Google make sense—but how does it contribute to the economic recovery?
To be sure, sometimes more regulation is helpful to making markets work better; deposit insurance is a case in point, as are rules prohibiting various kinds of financial chicanery. In other cases, such as drug safety, everyone would agree that effective regulation is essential.
But absent some clear and present danger to public health or safety, and with America mired in an agonizing slow recovery, we need to put innovation and job-creation first. This means taking a light-handed approach to regulation, especially where the harm it is intended to prevent are still largely hypothetical.
More fundamentally, we should build on the self-policing approach of the January executive order, with an independent Regulatory Improvement Commission that would gather input from all stakeholders in order to evaluate and prune excess regulation. The fact is that self-reviews like the one initiated in January have been falling short for 30 years.
What’s needed is a regulatory system that supports innovation and job creation while also protecting public well being. That’s why a presidential jobs tour should include time with regulators to remind them that putting Americans back to work must be our highest priority.
Here is a ten point agenda that I had like you to pursue. Appoint people with fresh ideas and team them with members of your team to pursue each of this item and score each of them (as "zero" or "hero", based on their failure or success in their task).
1. Cut a deal with big corporations e.g., CISCO, GOOGLE, DELL, and try to generate new revenue in the system (introduce a new and lower tax clause that help them bringing the profits from foreign countries at the helm of requiring them to create new jobs from most of the money that they saved by such reduced taxes). In other words, they get free labor to work on their problem from today.
2. Remove social security tax cap (everybody shall pay the social security taxes at same tax rate!)
3. Introduce spending cap on individual’s Medicare related health care cost on annual basis. Medicare programs shall not go on spending millions on individual’s health care cost. The expensive procedures must be performed at Government funded facilities and not the private ones.
4. Innovation by funding the “public-private research endeavors”. Small business/research firm can seek govt. facilities and also seek funding support to conduct joint research activities which otherwise not possible to do so, by themselves.
5. Simplify the tax code, I mean really simplify it: “Everybody shall pay at the same tax rate, say 15%”. All of a sudden, there is no gimmick, no waste, no loopholes, and no charities to any sector of the society. Don’t incentivize people to remain poor. Most importantly nobody also complains about others for not giving their fare share, and basically it means that republican have nothing to fight over!!!
6. Sign trade agreements with as many countries as possible especially the ones where we have high stakes. This will help US companies shall able to sell their products and services abroad. Use all your negotiation skills/ammunition for countries who won’t agree.
7. Pull out of Iraq by end of 2011 and by mid 2012 from Afghanistan. No more policing. Keep military presence in these countries at a level that is sufficient for fulfilling the host country’s training requirements as well as our own security requirements here in US (to deal with known threats via remote operations).
8. Close “Gitmo”, and help open a new facility. This new facility could potentially help deal with all the existing as well as new national security threats entirely within its own borders.
9. Increase foreign aid to Africa and other poorer nations. Help our and other industries around the globe to invest in such countries and help create local jobs (rather than letting poor folks beg for food!).
10. Amend the new health care law. Remove the clause related to mandatory purchase requirements instead incentivize people so that ‘opt-out’ becomes rather irrational!!
I think you and most people recognize this very well -“If you could not bring the unemployment numbers down considerably, you will have hard time getting re-elected”.
If you achieve even half of what I am suggesting here....nobody has any chance to stand and debate in front of you.
Good Luck !!
What"’s needed is a regulatory system that supports innovation and job creation while also protecting public well being."
Learn from the Europeans. Knowing how important it is to protect the enviroment and provide growth, they have found a right balance.
Learn from Europe? No thanks, we don't need to move backwards. Government regulation is the biggest deterrent out there. Look at the housing market. 9/1/2011 new appraisal regulations go into effect that will crush the housing market. Nothing below the front door will be valued above 'unfinished storage space'. that means minimal value. All split levels, all split foyers and all finished basements loose value- for no good reason!..if you enclosed your garage- you will be penalized since garages have value. This is a historic move to destroy a major market. It has to stop now. Obama, you're fired!
You do move backward RAP ... THREE ... TWO ... ONE.
Here's what Blanche Lincoln had to say about the President's bus tour and the EPA: http://www.politico.com/arena/perm/Former_U_S__Senator_Blanche__Lincoln__38C0B333-45CA-4AE6-96B7-D70A5F7B57A6.html
Obama doesn't have the smarts to even understand what the heck is going on with his so called Regulators. He is so far over in the wrong direction we will not recover for another 10 years. Lord help us retirees if he is re-elected–I get the impression he wants us to die off faster.
True. His executive order is a sham. No teeth. To have teeth against regulators, there has to be a stick big enough to fire them like Reagan firing the air traffic controllers. Remember where Obama came from: Acorn stuff, government funded people who teach pimps how to get money and health insurance scams.
I thought the headline said "resign"–What a disappointment
To Michael Mandel,
I suspect Mr. Mandel collects a paycheck from A T & T, or he has clearly not reviewed the facts.
The $39 billion deal, (AT&T-T-Mobile) would leave nearly 80 percent of the marketplace in the hands of AT&T and Verizon.
That is a ridiculous amount of leverage! The merger would leave consumers with higher prices, fewer choices and less innovation.
Get the facts!
LOL, masses of regulations were put in by megacorporations to restrain upstart entrepreneurs! In fact, most regulations put forth by Republicans for the past 20 years are of that sort. Then there are the regulations put in after egregious crimes knowingly committed by business. For example: if a company on a river knowingly dumps millions of gallons of toxins killing fish and human beings... they cry that it was not illegal. Laws are passed and regulations promulgated to specifically make it illegal. A company knowingly makes infant car seats that won't survive a 10 MPH crash... they dry that it was not illegal. Laws are passed and regulations promulgated to specifically make it illegal. Who is to blame for the proliferation of laws and regulations constraining business? BUSINESS. They have been terrible citizens and require laws and regulations to keep from killing us all with their malfeasance. Regulations killing business or business killing citizens?
Some days I worry less about Third World Countries taking manufacturing on... I don't think it is low wages as a big attractor, but the ability to throw toxins everywhere with impunity (no laws or regs against it). However, many third world countries have sued the global megas for the same reasons we passed laws and regs here against those heinous crimes against humanity. Within 20 years they will not be able to do those things in other countries, either. Why spend trillions moving plants from country to country, advertising, buying politicians? Better to spend on research and development learning to make better products a better way. That would take... leadership and foresight! Oh well... corporate drones will not make the rational choice until they wear the world out with their malfeasance.
What are you talking about? The two cases mentioned have nothing to do with toxins. Google toxic?
A large number of regulations of global multinationals have to do with toxins. The global multis have been after Congress and the President to drop the EPA and other regulations having to do with air and water quality as well as manufacturing toxins and OSHA regulations. MOST regulations were put in after corporations poisoned someone or something... or committed fraud like using accounting systems that are misleading to stockholders, etc. Regulations almost never precede bad behavior... they FOLLOW it.
But why would the regulators (throttlers) care about jobs when they themselves have one? Who cares about the rest.
The best way to cure this: fire 1/2 to 3/4 of them and start over if there is a problem.
This blog is good. There is often all the suitable iatromnfion in the recommendations of my fingers. Thanks and keep up the great work!
Obama speaks with forked tongue. He himself never had a job. The so called teaching position was a sham, he was not a
professor, yet the liberals made it look like he was an accomplished professor. Nonsense. So there is the problem with government leaders and regulators: they have never worked for a living.
bank regulators are killing small business in my small town. the FDIC has determined that the banks have 'too much exposure" to commercial real estate loans. The banks are thus prevented from making loans to even their best customers on the best projects because of this portfolio analysis. Small business grows and improves by borrowing against its commercial real estate to fund long term projects. this is the seed bed for economic growth. it is being stifled by a dim witted auditor with a spreadsheet program.
Funny thing about regulation....We are here in this situation because we deregulated. Is this lost on the author. Ask, Allan Greenspan about "fundamentals" of laisez faire governments. That was the financial markets. And we saw Banks that became Too Big to Fail.
The catch 22 is...well you catch it after collapes occurs and the beneficiary simply shrugs his shoulder and says "oooops".
Further, the FCC is doing just fine. I am sure their was congratulations and investigation occuring at the same time. Are they mutually exclusive?
This idea that we can have unregulated business, self policing, deregulation by the corps/banks etc. themselves has proven to be fatal to our economy.
THEY SAID REGULATION IS BAD FOR GROWTH, SO VARIOUS PRESIDENTS RELAX FINANCIAL REGULATIONS. EVERYONE KNOWS THE RESULT OF IT. NOW, THEY SING THE SAME SONG IN OTHER SECTORS ... PREPARE TO BE RIPPED OFF TO THE BONE.
Jug Ears is toast in November, 1012 anyway...anything he says, can and will be used against him... Via a One Term President...he's even worse than Jimmy Carter...and Carter was absolutely terrible.
Deregulated? No, no, no, no.
You misunderstand how your government works.
First, Congress establishes its prerogative to interfere with an industry.
Then the executive branch proposes rules which will cost firms $$$.
Small firms complain and are ignored.
Large firms complain and are ignored.
Large firms send lobbyists to make large campaign contributions to members of the appropriate committee and presidential candidates of both parties.
Congress and the executive rework regulations so that large firms can arrange their operations so as to be largely unaffected, as in the Volker Rule.
Small firms get stuck with losing $$$. The economy shrinks.
Accountants, lawyers, and compliance personnel are hiring.
The only bright spot on the national map of employment is... D.C.
It is said we won the Cold War. I'm unconvinced. I see soviet-style apparatchiks all over D.C. It's just that they're American.
dave1 No, no, no
You misunderstand how your corporation works.
First, they rip people off with weighted contracts.
Then the government proposed a rule to stop that.
Second, they pour toxins into lakes and rivers and air.
Then the government proposed a rule to stop that.
Third, they kill people and the environment.
Then the government proposed a rule to stop that.
Fourth, after breaking every ethics rule in the book, they cry FOUL!!!!!
Then, after all the back and forth with malfeasance and extra rules... they buy a President... and he appoints an Attorney General... and you get Deferred Prosecution Agreements! No global multinational has to follow ANY RULES OR LAWS. But they still want some cheese with that WHINE.
Yes! I used to have a 45 minute cmomute (one way) when I was attending community college. And given the fact that all science professors think their students ought to be ready to learn at 8am, that meant I had to leave my house 6:30! I still can't believe I did that for two years straight before moving closer to school. And that was before I started drinking coffee! How'd I do it?! Now I'm lucky to be living only 15 minutes away from my job!
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