Regulations as a political scapegoat

Because Federal and State Regulations are pretty arcane and remote from most peoples day to day experience they are a regular boogie man for politicians seeking to get elected.  Currently regulations are frequently described as "job destroyers" or some similar term.

As someone whose business in significant part depends on understanding the nature and history of Federal and State regulations the political rhetoric sometimes seems divorced from reality.  Regulations aren't some cruel torment dreamed up by politicians to torment business people, they are generally a crucial part of making markets function.  They are simply laws to insure people clean up the messes they make trying to make as they go about their business.

Suppose I own a paper manufacturing business.  I act responsibly by disposing of all my toxic chemicals in a responsible manner.  The guy across town builds a paper manufacturing business, but he just dumps his toxic chemicals in the river.  He now has lower costs than me, so can undercharge me.  If I don't stop acting responsibly he puts me out of business.   So instead of the rest of us paying slightly higher costs for paper now society has a poisonous river they will have to clean up, and lots of people are probably going to get sick and have lots of medical bills.

Or suppose I manufacture widgets.  I pay my employees a decent wage, spend the money I need to spend to make the workplace safe, and make a little profit.  Then the guy across town starts building widgets.  He doesn't spend a dime to keep employees safe, pays the employees as little as possible and undercuts my prices.  I am out of business unless I adopt his business practices, and the the long run, maybe so is he as the workers in the town eventually can no longer afford the widgets he is manufacturing.

Regulations are always long and complex, even convoluted.  They have to be to prevent people from using slick lawyers to get around them.  But they are absolutely necessary to the long term health of society.  Are there obsolete or poorly thought out regulations?  Unquestionably - but it is hard work to figure out which ones are obsolete or not accomplishing their goals, hard work that the politicians who rail against regulations are seldom willing to do. History has demonstrated that often the regulations that politicians loudly complain about are the ones that make wealthy people behave responsibly to protect our economy and our health.  Meanwhile obsolete or useless regulations get ignored because their is no political hay to be made in eliminating them.

What qualifications prepare one to be a political leader?

Few of us, no matter how qualified we are in our particular field of expertise, would think we could step in an operating  room and perform surgery, or design a bridge to support the weight of traffic, or step right into almost any other field of expertise and be competent without a long training period.

But when it comes to politics the world is full of people who think they can step right in and be competent.

This creates a real problem, because getting elected is pretty easy if you have money, some degree of public speaking ability, and attractiveness.   But being competent at steering the country is a job that requires a broad base of knowledge and understanding in widely diverse subjects like economics, psychology, history and law.

The last few years the political world has been full of people that made a lot of money in business who think that means they can successfully run a government.  The problem is, business is easy.  Oh you have to work hard and make tough decisions, but figuring out what decisions to make is relatively easy because you have one goal to focus on - what will make money?  What really sets people apart in the business context is ruthlessness.  If laying off 2000 people is what will make the most money, you have to be able to do it without letting the impact on those people affect you.

Politics can be that easy if your a dictator.  Your goal is your own self interest, with little concern for the powerless.

But in a democracy there is no such simple goal to govern your decisions.  Idealists would say you should do what is best for everybody, but often every choice is a choice between helping one group at the expense of another group. So democracy ends up being a more benign version of a dictatorship - whoever has power gets their way at the expense of others.

Since 1908 there have been 18 Presidents.  8 were lawyers - Taft, Woodrow Wilson, Calvin Coolidge, FDR, Nixon, Ford, Clinton and Obama.  7 came out of a business background, ranging from Warren Harding, who owned a newspaper, to Herbert Hoover the mining engineer, to Harry Truman, with his brief fling as a haberdasher, to Jimmy Carter the Peanut farmer, Ronald Reagan the actor and Union President, and the two Bushes with their oil industry interests.

Here is a list of Presidents and their vocations:

William Howard Taft - Rep - 1909-1912 - Lawyer
Woodrow Wilson - Dem- 1913 to 1920 - Lawyer
Warren Harding - Rep - 1921 to 1923 (died in office) - Newspaper owner
Calvin Coolidge -Rep - 1923 to 1929 - Lawyer
Herbert Hoover -  Rep - 1929 to 1933 - Mining Engineer
FDR - Dem - 1933 to 1945 (died in office) - Lawyer
Truman - Dem - 1945 to 1953 - briefly business (retail) but lifelong politician
Dwight D. Eisenhower - Rep - 1953 to 1961 - Career Military Officer
JFK - Dem - 1961 to 1963 (died in office) -  In the military in WW II but aiming at politics his whole life.
LBJ - Dem - 1963 to 1969 - briefly teacher - lifelong politican
Nixon - Rep - 1969 to 1976 - Lawyer / politician - made his name as a prosecutor
Gerry Ford - Rep - 1976 to 1977 - Lawyer/politician
Jimmy Carter - Dem - 1977 to 1981 - Navy, Peanut Farmer
Ron Reagan - Rep - 1981 to 1989 - Radio Sports announcer, actor, union rep
Bush Sr.- Rep -  (1989 to 1993) - Economics/Investment.banking/oil/politics
Clinton - Dem - 1993 to 2001 - Lawyer
Bush Jr. - Rep - 2001 to 2009 MBA - Biz and politics
Obama - Dem - 2009 to      -Lawyer

Statistics and light posts

There is an old joke about people using facts like a drunk uses a light post - for support, not illumination.  In the February 23, 2012 Republican debate Rick Santorum made a statement that is a perfect example of how statistics can be used the same way.

The former Senator stated that the defense spending was not the problem with the Federal deficit, that entitlements were the problem, because only 16% of Federal spending was on defense.  That is so twisted it made my jaw drop.  This is a former Senator - is he cynically manufacturing misleading statistics to support his political position, or does he really not get it?

Here is what he is either hiding or ignoring - Congress has borrowed money from working people for decades to fund tax cuts for wealthy people.

Here are the facts:  There are two main sources of tax revenue for the United States.  Payroll taxes and Income taxes.   Payroll taxes are what is taken out of all of our paychecks every month for social security, medicare, unemployment insurance and other similar programs.  In other words, all those programs that actually impact ordinary working citizens are funded by payroll taxes.  The bulk of the payroll tax is to cover Social Security and Medicare.  To my knowledge in my lifetime payroll tax income has always exceeded the expenditures on these programs and in fact generally run big surpluses. (I am not sure about how unemployment insurance taxes and expenditures stack up over time)

These payroll tax funds were supposed to have been trust funds - the money could not be used for other purposes, but Congress started raiding the trusts funds years ago, in large part to close the big holes in the Federal budget blown by tax cuts on income taxes.  Defense spending has for decades equaled about 50% of income tax revenue.  The remaining 50% pays for all the other things the Federal Government does.  Basically for decades the Congress has not imposed enough income tax to cover the costs of government and they have covered it up by using payroll tax money, or running a deficit.  So Senator Santorum's 16% figure was arrived at by looking at the total Federal budget, and then laying the blame for the deficit on the part of the budget that has actually paid for itself over the years.

I don't know which scenario is more worrisome.  That former Senator Santorum doesn't understand these distinctions, or that he is quite comfortable manufacturing misleading statistics to make a misleading debating point.