Regulation: The Sporting Equivalent of Forcing Nick Saban to Win With Mercer Recruits

Regulation: The Sporting Equivalent of Forcing Nick Saban to Win With Mercer Recruits
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While every business handles personnel differently, one well-regarded approach is to annually make redundant the bottom 5 to 10 percent of employees.  Such a policy redounds to business and worker alike.  Businesses shed the workers who aren’t producing a multiple of their pay, while employees gain by virtue of exiting the kind of work that doesn’t reinforce their skills. 

Crucial here is that businesses have no choice.  They have shareholders for whom they’re striving to earn profits.  For them to retain individuals whose lack of productivity holds the business down is for them to risk the business itself, along with the job of every employee. 

Unfortunately, businesses can’t make redundant everyone holding them down.  They can’t because they must carry more than a few individuals who, while they don’t work for them, do shrink their profits.  These workers are regulators.

To understand the wet blanket that regulators lay on businesses, readers need only consider the previously mentioned desire among many businesses to annually shed the underperformers.  Important here is that regulators are a much bigger drain on businesses than those who simply don't measure up.  Figure that that they’re generally the people who never even rated jobs at the businesses they’re regulating, but their decisions and actions have a big impact on the health of those same businesses. 

How do we know they don’t rate jobs at the companies they presume to oversee? That’s easy.  If they could they wouldn’t be regulators.  Why work for government pay, and inside bureaucracies that endlessly stifle individual initiative, if there’s better pay and there are better personal growth options outside government?

Journalists might say it’s not all about the money when it comes to work, but if so, readers need only pose a question to them: given the chance to work at the Pine Bluff Commercial in Arkansas, or the New York Times, which would they take? We know the answer.  Just as the Times offers better opportunities for the journalistically minded, so does the private sector offer better opportunity than do the government agencies vainly attempting to regulate the private sector. 

Vainly is italicized above mainly because regulation by its very name fails. Why would anyone think those who don’t measure up to industry work could police those who do? Citigroup had no less than 60 bank regulators permanently staffed in its headquarters when its fortunes went south yet again in 2008.  No doubt these regulators harassed the more talented people they were overseeing in 2008, but with very little success.  Regulation is once again a big cost in the way that redundant workers are, but it offers much less than a return.  See Citigroup again, and again, and again.  Among others….

All of which brings us to a recent front-page New York Times article by Binyamin Appelbaum and Jim Tankersley.  They actually surprised in their hint at the possibility that the Trump administration’s focus on shrinking regulation has perhaps enhanced optimism and investment among businesses.  Well of course it has.  Any time the regulatory burden is reduced, businesses have more time to generate profits; profits earned while not paying as much for the workers who don’t actually rate work for them, but whose naïve attempts at policing them are the business equivalent of endless numbers of unqualified, unproductive workers remaining on staff, year after year. 

Yet soon enough Appelbaum and Tankersley were back to being Appelbaum and Tankersely.  Even though the shedding of what saps value is always and everywhere good for any business, Appelbaum and Tankersley assured their surely horrified readers that they’d not gone Trumpian with their subsequent unsupported assertion that “there is little historical evidence tying regulation levels to growth.” They quoted lefty economist Jared Bernstein as someone who agrees with what’s ridiculous.  For Appelbaum, Tankersley and Bernstein to say de-regulation has no discernible economic growth impact is the equivalent of them saying Alabama would still routinely win national championships even if forced to swap out Nick Saban’s five star recruits for those of annual Crimson Tide punching bag Mercer University.  Sadly, it gets sillier. 

According to Appelbaum and Tankersley, regulations can realistically be positive; which is like them saying Alabama’s teams might actually be better with the talent from the Mercer Bears.  Citing the views of “regulatory proponents,” they note that federal rules “can have positive economic effects in the long run, saving companies from violations that could cost them both financially and reputationally.” Ok, but business are already in the business of profit.  That’s what lefties always remind us, and it’s true.  Thank goodness they elevate profits, and with their elevation of profits, so must they work feverishly to maintain the company’s reputation. 

So why the need for regulation? Appelbaum and Tankersley’s assertion is almost a non-sequitur.  If profitability and reputation matter, why would they need babysitting from those who couldn’t get jobs with them in the normal world, and who are already a drain on profitability? Precisely because businesses seek long-term success they’re constantly shedding their own underperformers, yet “regulatory proponents” want them to take on even bigger underperformers through the backdoor that is government? Why? 

The answer to why is something Appelbaum and Tankersley can’t produce. Missed by the endlessly predictable Times scribes is something else that “regulatory proponents” have never contemplated: if regulators could truly boost company profits and reputation they would already be working for those they’re suffocating.  Since they’re not, and since their power to harass companies is shrinking, readers can rest assured that the results will be positive in much the same way that sports teams generally improve when able to replace lousy players with good ones. 

John Tamny is a speechwriter and writer of opinion pieces for clients, he's editor of RealClearMarkets, Director of the Center for Economic Freedom at FreedomWorks, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). His new book is The End of Work, about the exciting explosion of remunerative jobs that don't feel at all like work.  He's also the author of Who Needs the Fed? and Popular Economics. He can be reached at jtamny@realclearmarkets.com.  

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