Every now and then the journalistic community commits enough sins in a short span to drive me wild. The latest is Time’s effort to get an F in undergraduate economics and logic. In effect, Time purports to rebut the notion that regulatory burdens hurt U.S. growth by reporting that in “mid-October the World Bank released its annual ranking of countries on the basis of ease of doing business; it took into account the number of regulations, tax rates, the time it takes to start a business and other factors. Out of 183 countries, the US was deemed the fourth easiest place in the world to do business, unchanged from the year before.”
Further, a “number of lower-ranked nations — including South Africa, China and Brazil — have had much faster-growing economies than the US in the past five years.”
Strike one. Strike two. Strike three. Time is out.
Strike one: “The U.S. was deemed the fourth easiest place.” So what? The level does not matter; the change does. If it used to be the best place for doing business, then the increased regulations would have had a significant effect. This is not much more complicated than “Shakespeare is better than Paul Krugman,” so I would think even Time could get it.
Strike two: The U.S. was ranked fourth, “unchanged from the year before.” So what? Ordinal rankings reveal nothing about the actual economic burden posed by regulations. If a country was dead last and made things infinitely worse, the same statement would apply.
Strike three: A “number of lower-ranked nations — including South Africa, China and Brazil — have had much faster-growing economies than the U.S. in the past five years.” Nobodyever said that regulatory burdens were the only thing that determined growth. Growth depends on demographics, public policies, investment opportunities, and a myriad of other factors. It is misleading and misinformed in the extreme to suggest otherwise.
The benefit-cost analysis surround U.S. health, safety, environmental, and other regulations is a serious issue. At a time when economic growth has to be the top priority, accurately educating regarding the tradeoffs between economic growth and other policy objectives is at a premium. Shoddy efforts like those of Time set back the debate.