Around 11:00 this morning some senior Yacht Party members and their acolytes will stand in front of microphones in Sacramento trumpeting a report about state labor regulations and small businesses. They can be expected to say that the real problem with the California economy is all those gosh darn regulations, and if only businesses could free themselves from the iron boot of – I don’t know, the 40-hour work week, child labor, the right to have an employee saw off his fingers in a lathe without responsibility, it’s a different thing every week with these people – the state could be saved.
It’s worth understanding what this report that makes them go ga-ga is all about. John Myers had a sketch of it the other day.
The document, wonkishly titled Cost of State Regulations on California Small Business Study, was quietly made public late yesterday. You can read it here […]
The summary says it all, at least in the eyes of the business community:
The study finds that the total cost of [business]regulation to the State of California is $492.994 billion which is almost five times the State’s general fund budget, and almost a third of the State’s gross product. The cost of regulation results in an employment loss of 3.8 million jobs which is a tenth of the State’s population. Since small business constitute 99.2% of all employer businesses in California, and all of non-employer business, the regulatory cost is borne almost completely by small business. The total cost of regulation was $134,122.48 per small business in California in 2007, labor income not created or lost was $4,359.55 per small business, indirect business taxes not generated or lost were $57,260.15 per small business, and finally roughly one job lost per small business.
Basically, regulations take your wives, enslave your children, throw your ice cream on the ground, and write “loser” on your chest in sun tan lotion when you fall asleep at the beach. It’s amazing how in line this study is with standard conservative tropes about onerous regulations and big government. I wonder why that is? Here’s Myers.
So how do (authors Sanjay Varshney and Dennis Tootelian) reach their conclusions? The 33 page report (85 pages if you include the charts) relies heavily on Forbes Magazine and its annual report of the best — and worst — states in which to do business. The 2008 report ranks California #40 in the nation, and that’s the relative placement the authors used for their calculations.
“Forbes data is reliable,” says the study, “in that it uses credible sources of secondary data that are well recognized and respected as credible independent research in the business world.”
Perhaps, but Forbes’ proprietary methodology isn’t entirely transparent. Its website does note the sources for its rankings: data from both the federal government and nonprofits like the Tax Foundation and the conservative-leaning Pacific Research Institute.
This “academic” study cribbed their data from a MAGAZINE profile? One owned by a movement conservative, which includes materials from wingnut welfare think tanks? And we’re supposed to just let that go?
Myers goes on to note that the way Varshney and Tootelian transform the Forbes data into dollar amounts is entirely inscrutable, but designed to advance the proposition that every single state’s set of regulations are harmful to business. “Even Forbes’ #1 state for business friendliness, Virginia, comes out with a regulatory climate that’s a net loss to the state of $4.4 billion.” The study also neglects to determine which regulations harm business more or less. It’s a partisan mess of a report and it should not be taken seriously. Which is why the Yacht Party has taken to it so quickly, with classy headlines like “California Businesses Waterboarded by Governmental Overregulation.”
Look, labor regulations serve a particular purpose. It’s true that they have a cost to business, but they also provide a significant cost savings to the individual, to the public health system, to the overall quality of life for the laborer. We have made these trade-offs over hundreds of years. The Yacht Party may think that The Jungle is a fantasy utopia, but in my experience, Californians and pretty much everybody else appreciate safe food and clean air and the minimum wage.
You can get a good sense of the intellectual honesty of a politician – and the media – by seeing if they bite at this crap sandwich of a report.