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An Imaginary Dustup? The Incalculable Harm of Regulation

Sunday, January 8, 2012

Why surveys cannot begin to capture the cumulative damage of regulations. It’s not aggie paranoia or ‘right-wing nuttery.’

Timothy Noah writing in The New Republic. A column by David Brooks. A front-page news story in the Kansas City Star. All with the same theme: The regulatory actions of the Obama administration are nothing out of the ordinary, and new regulations cannot possibly be blamed for our economic problems.

Both Noah and a December article in the Huffington Post concentrate on the dustup over particulate regulation, or the so-called dust rule. Both point out that the Environmental Protection Agency never proposed a rule regulating farm dust. Both have some fun with Republicans and farmers complaining about what the Huffington Post calls the “imaginary dust rule.” Noah calls complaints about the rule “right wing nuttery” and accuses the GOP of demagoguery. That seems a little extreme (although I should admit my own complicity in this flap: see “All Ginned Up”).

Ah, well. Political pressure may well have prevented a new and stricter rule on fugitive dust. The lesson we farmers are likely to draw is that it pays to be early and to work hard. Not only that, but our concerns are well founded. This fall, one of the largest grain elevators in this part of Missouri was closed down for several days during the height of harvest because dust (particulate) readings on the EPA monitors in the area exceeded the limits required by the present rule. The trucks turned away were not imaginary, and the wages employees lost were not Monopoly money; local farmers lost a day’s harvest because of these all-too-real regulations. But if The New Republic says complaining about tightening these regulations is “special pleading,” and if the Huffington Post tells us that the problem is a figment of our collective imaginations, then I’ll tell my neighbors to quit their bitching. Wouldn’t want to be a right-wing nut, you know.

My grandchildren have learned a lesson as well. They’ve been told that their work has no value, that their self-worth must be sacrificed to a small improvement in safety statistics.

Yep, we are just imagining these regulations. That’s what I’ll tell one of the suppliers for my farm, who runs a very small fertilizer business. He was recently fined around a third of his yearly profit for failing to correctly complete his “Risk Management Plan.” He had hired a consultant, but his consultant neglected to complete the form in the prescribed manner. Even though the form was incomplete, the information he did file filled a three-ring binder three inches thick. The owner of the business has to re-file the plan online. The instruction form for the filing is 110 pages. Timothy Noah subtitled his article “Republicans surpass their own environmental absurdity.” My friend has been operating his business, without incident, for nearly 40 years. Absurd is no doubt how he would describe the new regulatory regime, if he was asked to do so without resorting to four letter words.

Similarly, the Department of Labor has recently released a proposed rule on child labor. The rule would end the learner exemption that allows farm kids to work with animals or operate machinery during their participation in a 4-H or FFA (formerly known as Future Farmers of America) project. The new rule would also prohibit children from working on their grandfather’s farm, or a family farm organized as a corporation.

Here’s a picture of a young person working on her grandparent’s farm.

Hurst Grandchild 1

That would be my farm, that would be my granddaughter, and you can rest assured, she wasn’t actually pushing that cart. Although she is always more than willing to “help.”

Hurst Grandchild 2

Tens of thousands of young people in their first two years of high school, the age range covered by the proposed rule, participate in what are called Supervised Agricultural Experiences as part of vocational training. The new rules would end their ability to work with livestock or operate machinery. My project when I was 14 and 15 years old was a couple of steers and 40 acres of corn. I fed the steers, helped to plant and harvest the corn, and kept a set of books for the whole operation. Only the bookkeeping would be allowed under the new rules.

One of the largest grain elevators in this part of Missouri was closed down for several days during the height of harvest because dust readings on the EPA monitors in the area exceeded the limits.

After four years working as a young teenager, I’d saved enough money to pay for my college education. While corn prices today are at record highs, they have not increased as much as tuition has, so that path to a college education may not be available to my granddaughter.

Either way, the point is not ultimately about money. It’s about what constitutes an education. To those of us in flyover country, “learning how to work” is still a crucial part of growing up.

That faith in the value of work, even for kids under 16, is the sort of thing that causes our betters to lose patience with us. Secretary of Labor Hilda Solis has said that she refuses to “stand by while youngsters working on farms are robbed of their childhood.” A recent article in the Kansas Law Journal calling for stricter rules on farm labor attacked our old-fashioned beliefs head on: “Even today, many Americans believe in the value of labor intensive work, and that positive work experience can foster individual development, and a sense of responsibility.” Yes, we still believe those things. Even today.

Lest you believe that this is another example of aggie paranoia, I should mention the experience of some friends of mine, who just endured a visit from two Department of Labor inspectors to their greenhouse business. When the 15-year-old grandson of the owner flashed by on a skid loader, the inspectors warned that his days as a machinery operator were numbered. Imaginary rules, indeed.

David Brooks argues that the Obama administration is doing nothing out of the ordinary on the regulatory front, and that increased regulation is not to blame for our economy’s woes. But the first statement in that sentence does not necessarily imply the second. I’m afraid that Brooks is at least partially right: the Obama administration is much in keeping with the long-term growth of the administrative state.

One of my suppliers was recently fined around a third of his yearly profit for failing to correctly complete his ‘Risk Management Plan.’

According to Brooks, the Bureau of Labor reports that only 13 percent of employers answering a survey about employment changes credited regulation as a reason for layoffs. Brooks uses this figure to illustrate his contention that regulation isn’t causing our dismal unemployment numbers. I imagine that if you are part of that 13 percent your view is a little harsher than Mr. Brooks’s.

In any event, surveys cannot begin to capture the cumulative effect of regulations. I’m convinced that the economy has reached the Plimsoll line, and the economic boat can no longer stay afloat under the weight of the administrative state.

We can attempt to estimate the costs of regulations, but those estimates cannot capture the real burden of regulation. The problem is not the dollar amount of the fine my fertilizer supplier paid, or the loss of my grandchildren’s labor on our farm. We could quantify those things, but the number would mean very little. The true cost was described by the economist Bastiat when he wrote about the costs of the “things not seen.”

If you operate a grain elevator in St. Joseph, Missouri, or a fertilizer business in my home town, what incentive do you have to grow, to expand, to invest? You’re on notice that you are dangerous, that your activities are a threat to others.

The new Labor Department rule would prohibit children from working on their grandfather’s farm, or a family farm organized as a corporation.

If you are that fertilizer dealer, you’ve also learned something else. You’ve learned to be extremely cynical about the whole enterprise. The fine and the plan don’t really require him to do anything differently than he does now. The only thing the EPA really requires of him is paperwork. The cost to the economy is not the fines or the lost business during harvest, but rather the resignation to the bureaucratic yoke and the cynicism about the federal government. The real cost is the investment not made, the risk not taken.

My grandchildren have learned a lesson as well. They’ve been told that their work has no value, that their self-worth must be sacrificed to a small improvement in safety statistics. (Did I mention that the rate of farm accidents involving kids has fallen by half in the past two decades?) They’ll not have the opportunity I had to learn the values of work alongside my family and the sense of personal satisfaction I received for a job well done. They’ll know that nothing will be expected of them until they are much older than 16. In fact, if the Obama administration’s rules in Obamacare are any indication of when childhood ends, they won’t really be adults until more than a decade after I was doing a man’s work. What’s the economic cost of that? It certainly isn’t captured by any number compiled by Washington regulators.

Keynes taught that economic doldrums are caused by a deficiency in aggregate demand, a decline in “animal spirits.” Hence the stimulus, and the tendency to credit increased regulation with economic activity. (Remember the consultant my fertilizer dealer hired? In a Keynesian world, that cost contributes to economic activity and is a good thing.) We’ve had a decline in animal spirits, all right. The animal spirits that once led to new businesses and discovering new ways of doing things are now channeled into hundreds of pages of Risk Management Plans. That’s not imaginary, and that’s why we’re in the shape we’re in.

Blake Hurst is a Missouri farmer.

FURTHER READING: Hurst also writes “Why I’m ‘Ginned Up’ about Regulation,” “A Big, Muddy Project Alright,” and “Our Real Food Problem.” Tim Josling contributes “Stuck in the Mud: How Farm Policy Undermines Free Trade.” Daniel A. Sumner, Vincent H. Smith, and Barry K. Goodwin discuss “American Boondoggle: Fixing the 2012 Farm Bill.”

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