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One of the hottest issues in the presidential election is American manufacturing. Both President Barack Obama and his presumptive GOP rival Mitt Romney argue they are the candidate to bring manufacturing jobs back to the U.S. But some say challenges remain that could stifle manufacturing’s growth, including stiff federal regulations. An industry report says major regulations –- those costing more than $100 million — could reduce output in 2012 by up to $500 billion. And watchdog groups argue this does not take into account the health, safety and environmental benefits of regulations. A panel joins Diane to discuss different perspectives on manufacturing and regulation.
- Ro Khanna former deputy assistant Commerce Secretary and author of the new book, “Entrepreneurial Nation: Why Manufacturing is Still Key to America’s Future.”
- Rena Steinzor president of the Center for Progressive Reform and professor of law at the University of Maryland.
- Stephen Gold president of Manufacturers Alliance for Productivity and Innovation.
MS DIANE REHMThanks for joining us. I'm Diane Rehm. Increasing American productivity is a key issue in this year's presidential campaign, but manufacturers say regardless of which party is in the White House, they've been hit with a rapidly increasing number of regulations in the past decade. A new industry report warns of up to six percent reduced output in the next decade due to major regulations. The report was commissioned by the Manufacturer's Alliance for Productivity and Innovation. MAPI's president, Stephen Gold, joins me in the studio.
MS DIANE REHMAlso here with me, Rena Steinzor, president of the Center for Progressive Reform, and Ro Khanna, former deputy assistant secretary of commerce under President Obama, and author of "Entrepreneurial Nation: Why Manufacturing is Still Key to American's Future." I hope you'll join us, 800-433-8850, send us your email to firstname.lastname@example.org, follow us on Facebook or Twitter. Good morning to all of you.
REHMStephen Gold, I'll start with you. Tell us why your group commissioned this report.
MR. STEPHEN GOLDSure. No, I appreciate it. It's good to be here this morning. So first of all, let me say we're not a lobbying group, we're a professional society. We've been around about 80 years. We provide executive education for thousands of manufacturing executives, but we also provide economic analysis, and one of the topics that has been on the lips of virtually all of our manufacturing executives is the rising burden -- what they feel like the rising burden of regulatory compliance costs.
MR. STEPHEN GOLDOne of the reasons we decided to do it now is because manufacturers have been in the -- or manufacturing has been in the news for several years now. It's been the engine driving the very slow economic recovery. Policy makers finally have started to realize that manufacturing is very, very important to our economic growth, to job creation. We invest more in innovation than other sectors. We have a higher multiplier effect.
GOLDWe create -- you know, so one of the reasons we did is this seems like a great time to shine a spotlight on what is virtually unanimous across manufacturers is a challenge. And so what we did was we went out and we commissioned NERA Economic Consulting, which is a well-known, reputable consulting firm -- economic consulting firm in town. We said, just tell us what's the impact of regulation on manufacturers right now, and they have an economic model. The actually did a deep dive. Nobody's actually ever looked at regulations, just on manufacturers.
GOLDOMB, of course, does it across the board. And what they found, a number of findings, but one of the things they found, which I thought was fascinating, was that since 1981, 2,183 manufacturing specific regulations have been promulgated. That's roughly just under one-and-a-half regulations targeting manufacturers every week for 30 years. As you noted, it could have a -- it's supposed to have perhaps up to six percent reduction in output for manufacturing over the next decade.
GOLDOne of the thing, you know, manufacturers intuitively have felt like there's a rising regulatory compliance cost on them, and what the study found was since 1998, the regulatory costs for manufacturers have risen an average each year of 7.6 percent. Manufacturing itself, manufacturing output, has risen about 0.4 percent in that time, so even when we're in an economic slump, even when there's an economic recession, even when manufacturers are getting hit harder than other parts of the -- than other manufacturing sectors around the world, regulatory costs continue to rise.
REHMSteven Gold, president of the Manufacturers Alliance for Productivity and Innovation, also known as MAPI. Rena Steinzor, what do you make of the report that came out with more than 2,000 new regulations, how it has perhaps cost manufacturers and indeed the economy?
MS. RENA STEINZORWell, I was disappointed by the report as I have been by the numerous similar reports that have come out in the last couple of years, and the reason is that they completely ignore the other side of the story which is the benefits that regulations bring to society. One of the most disliked set of rules in Steve's report are clean air rules that have given us reduced smog, gotten particulate matter out of the air, and those rules saved 164,000 adult lives in 2010, and will save 237,000 by 2020.
MS. RENA STEINZORYou have to be well enough to go to work and school. Those same regulations saved 13 million days of work loss, and 3.2 million days of school loss just in 2010. So I would say, if we're going to take a balanced look at this, it is true that manufacturers spend money complying with regulations, but they have a lot of other impediments. We have a reasonable wage paid in this country, unlike in perhaps China and Bangladesh where a lot of our jobs have been going, and we have -- we insist on clean air, clean water, safe drugs, safe food. We have all these wonderful benefits, and we wouldn't want to lose them, I'm absolutely sure.
REHMRena Steinzor, she's president of the Center for Progressive Reform. She's professor of law at the University of Maryland, and to you, Ro Khanna. I know that you have formerly been at the Obama administration's Department of Commerce. You're written a book with a subtitle, "Why Manufacturing is Still Key to America's Future." What do you make of this cost benefit analysis of what job regulations are doing, manufacturing regulations are doing?
MR. RO KHANNAI think we need a balanced approach. In Stephen Gold's report on regulation, footnote one points out that they don't take the benefits into account. And so if you're going to look at the cost, you also have to look at the benefits. We're never going to win a race to the bottom against China, Brazil or other countries. The way...
REHMNor should we.
KHANNANor should we. The way to keep manufacturing in this country, and the manufacturers I profile, is to be the most innovative, to pay our workers well so they're the most creative in coming up with production efficiencies, to customize products, and I don't think a race to the bottom is the answer. That said, certainly the complexity of regulation is one potential impediment, and the President Obama has done a number of things. He signed an executive in 2011 to review all the regulations and see which ones made sense and which didn't.
KHANNAHe has a program Select America to simplify the numerous regulations that manufacturers face. So I think it's a healthy debate, but I don't think we should take one side or the other. We need a balanced approached.
REHMRo Khanna, his new book is titled "Entrepreneurial Nation: Why Manufacturing is Still Key to America's Future." He's now a visiting lecturer in the Department of Economics at Stanford University, and a technology attorney in private practice. We do invite your questions, comments, 800-433-8850. Stephen Gold, how do you define major regulations?
GOLDWell, we don't -- I mean, the federal government defines it as anything that affects the economy at a hundred million dollars or more, or has that type of impact. And one of the other facts that were found in this study by NERA is that they were only able to look at major regulations. When I say there are 2,183 regulations, 1,948 of these were non-major. That is, there are no cost estimates for them. So in fact you have -- or for most of them.
GOLDSo in fact, you have a far -- so what NERA wanted to do was they wanted to have the most credible accurate report possible that did not take into the -- those regulations that were under a hundred million dollars, so in fact...
REHMAnd that's what major regulations are, the cost.
GOLDA hundred million dollars or more, exactly right.
REHMNow, that would certainly affect very few manufacturers.
GOLDNo. Well, this is how -- the effect on the economy, not on an individual manufacturer. So it's basically OMB taking a look at the impact of a regulation of society, not on a specific manufacturer.
REHMRena, how do you see it?
STEINZORAgain, I would just reiterate that most of these, the vast majority are rigorously analyzed for both the costs they will impose and the benefits. I would say the benefits are almost always understated. You can have a child with an asthma attack that has to visit the emergency room because smog has exacerbated that problem, and the value that is awarded that incident is $350, and, you know, you can't even get a plastic bracelet in a hospital for that little.
STEINZORSo the benefits area always understated. The costs are usually overstated because as a market develops for the technology, the cost comes down, and the numbers can't be taken gospel. With that said, I think that Steve's group unfortunately crunched a lot of numbers in a way that is very opaque. They used a model that as I understand it is not public, so the time is -- the amounts are confusing.
REHMRena Steinzor of the University of Maryland, president of the Center for Progressive Reform. Your calls, your email when we come back.
MS. DIANE REHMWe've heard lots of talk in this campaign about tax policy, about regulation policy about the creation, maintenance of small business. In this hour, we're talking about new study that has been done on the impact of regulation business, on manufacturing, most especially. Stephen Gold, how do these regulations affect small business in particular?
GOLDWell, they have a greater effect on small business and in large, because the large businesses typically have the resources that they've capital to hire extra accountants, hire extra attorneys and sets to hire the equipment necessary. There are more than a quarter of a million small manufacturers in the country. The vast majority of manufacturers in this country are going to be small. They're the ones who typically raise the issue first and let me know.
GOLDNone of them are saying let's get rid of regulation. They're simply saying let's make it more cost effective. Every dollar I spend to comply with the regulations, especially a complex regulation, is a dollar I can't spend on income for employees for new jobs or new capital equipment.
REHMRo, give me a sense of the impact on small business.
KHANNAWell, I think the concern that I heard from small businesses was more about the complexity in navigating the federal bureaucracy and the state bureaucracy. And I think the administration has and should continue to take steps to streamline how to navigate the bureaucracy, so people know with certainty what the regulations are. So there's a one-stop shop for whom to go to to be able to comply with them.
KHANNABut we need to keep in mind that I don't think it's the first thing out of the mouths of small businesses. They also talked about not having a skilled workforce and investing in the workforce, not having enough infrastructure, not having fair trade policy and the currency manipulation taking place in China. So I think while regulatory reform is one part of a solution, it's not a panacea to keep manufacturing in the United States.
REHMWhy has it become such a huge issue in this campaign race?
STEINZORI think there are two reasons. One is that it is the campaign against regulation is a top agenda item for big business. And they contribute overwhelmingly to the Republican Party and most Republican are actually on message denigrating regulation.
REHMBut we keep hearing from politicians on the rise that in fact regulation is hurting small business.
STEINZORWell, I understand that. I could not agree more with the comment that we need to streamline and make these regulations more understandable. But I think the second reason that we keep hearing about regulation is an effort to confuse the issue of why we're in trouble here economically. We're in trouble because the financial sector was deregulated, not because we had too much regulation.
STEINZORAnd I don't think anybody would look at what the crash that occurred in 2008 that we still have not crawled out of and say the problem there was that we were too tough on the banks. I mean, we see examples as Dodd-Frank and other efforts to control speculation are slowed down by the business community. We had the whole situation with Jamie Dimon declaring billions of dollars in loses just a few weeks ago. This is the price of deregulating in the way that business is demanding that it happen.
REHMWhich industry, Stephen Gold, have been particularly hard hit by rules and regulations?
GOLDWell, I can only speak for the manufacturing industry and manufacturing was struggling long before the financial collapse.
REHMBut which area...
GOLDWell, the energy intensive industries especially. And we used to have the largest chemical industry in the world here and it -- because of a variety of reasons started going offshore. But any energy intensive industry, transportation equipment industries, for indirect reasons, refining, petroleum refining...
GOLDExactly. So, energy especially and that is because of the high cost of environmental regulations.
REHMCan you give me an idea of what kind of environmental rules you're talking about that seem to be causing, for example, the petroleum industry, considering the fact that the petroleum industry is so far in the black?
GOLDWell, again, you're -- of course, petroleum industry is a global industry. They -- we're talking about specifically what's going in this country. The EPA -- nine of the ten most expensive rules do come out of the EPA. And this isn't to say that we shouldn't have clean air. It's just that, again, this is a Law of Diminishing Returns. We did a lot of clean-up of the air, 20, 30 years ago. It gets more and more expensive to clean up less and less pollution.
GOLDThat's not to say we shouldn't get rid of it. Obviously we should get rid of the pollution. The problem is it's not cost effective anymore. The industry -- there needs to be a public/private sector cooperation in order to make sure that we do it the most cost effective way possible so manufacturing can continue thriving in this country.
REHMWhat about something like the BP oil spill, Stephen?
GOLDRight. And needless to say, when manufacturer or anybody does something wrong, whether it's by air or, you know, or maliciously, they need to be -- the government gets to do something about that. But the vast majority of manufacturers aren't doing anything wrong, they're simply trying to create jobs, trying to make product in this country, trying to raise our living standards.
STEINZORI agree that manufacturers are trying to create jobs. But I think, as Ro was pointing out, there is a much larger picture here to the extent that we're exporting jobs offshore, it's because of energy cost, concern about worker wages, concerns about safety. Those are the reasons why we have this problem. And I would just note that Steve's group a few weeks ago issued a statement that I very much agreed with that said that manufacturing was slumping in this country because of the economic crisis in Europe.
STEINZORProblems like that are what is putting a drag on our manufacturing sector, not environmental protection that make it possible for people to go to work and school.
REHMRo Khanna, has -- have manufacturing regulations become kind of a boogeyman in this country?
KHANNAI think it's very appealing on the right to say, let's cut taxes and let's cut regulations and everything will be okay. But that's just an honest message to people in Ohio or Pennsylvania or the Midwest who are struggling to have manufacturing jobs. And if you go back to Alexander Hamilton, he articulated a very complex strategy for building a manufacturing base.
KHANNAIt involves tax incentives, it also involves investment in infrastructure and a skilled workforce, the right type of assistance to manufacturers. And so, I do think regulation has to be one part of a solution. But it's a comprehensive solution and focusing on that would be much more honest on how we're going to be competitive in a global society.
REHMSteve, how do you respond?
GOLDOh, I agree completely. We couldn't do a study on taxes and regulation and skilled workforce, we simply were focusing on an issue that I think has been -- has been focused on a lot and that is a chance to do a study just on the impact of regulation on manufacturers. So I agree completely with Ro. This has to be a varied approach to trying to increase our manufacturing base in this country.
REHMSo, last year the Obama administration ordered a review of regulations. How did that turn out?
KHANNAWell, my understanding, it was a January 2011 executive order and that the EPA and the Department of Transportation and the Department of Commerce have identified regulations where they think that they are too burdensome and costly and they're reviewing them and are streamlining them. Every department has been tasked with figuring out what the cost is. But they've also been tasked with figuring out what the benefit is.
KHANNAAnd you have to look at both sides. You know, my father was a chemical engineer at Rohm and Haas for 30 years and I'm very glad we had some regulations there so that he still has a healthy, happy life. And so we have to look at both sides.
STEINZORI think that the Obama administration's emphasis on what we call the look back, cleaning the closet for all the bad regulations has been unfortunately done at the cost of looking at where we are weak with regulations. You mentioned the BP oil spill. Right now, there are in the ballpark of 70 inspectors down in the Gulf of Mexico and there are 3,500 oil rigs and platforms.
STEINZORThe oil industry says BP was a rogue, it was an outlier. And the Oil Spill Commission that President Obama appointed actually said, no, the problems that led to the BP catastrophe are widespread throughout the industry. We're not doing enough to prevent another spill like that and we will have one. And I'm hopeful that if the president wins a second term that he will pivot and starts focusing on the deficiencies in regulations and not agree with this very biased line that regulation is at the root of all evil.
REHMHow much progress do you think the administration made, Stephen?
GOLDIt's a start. I mean, I think -- from my understanding, they've gotten rid of some obsolete regulations. I think part of the challenge is that it was not emphasized enough. I think that various federal agencies, really, I think have to do a deep dive. And as I said, this about a public-private partnership, I think. It's about talking to -- again, I'm talking speaking for manufacturers, bringing them and really trying to figure out not just what's obsolete but how can we, you know, provide safety, worker's safety, environmental safety, at the same time make sure that it's the least cost -- it's the most cost effective way possible.
REHMRena, give me an idea of the role that the Office of Information and Regulatory Affairs played in the whole process.
STEINZOROIRA, as it's pronounced, is the most powerful little office that you never heard of. It has, in one form or another, operated for four decades and it is the way that the president keeps control of regulatory agencies. Unfortunately, OIRA has served as a one-way ratchet. No regulation goes out the door that is major without its approval.
STEINZORAnd it has consistently changed 84 percent of EPA's regulations during this administration, has consistently weakened protections and stifled innovation and efforts by leaders like Lisa Jackson at the Environment Protection Agency who is the best administrator the agency has ever had.
REHMRena Steinzor of the School of Law at the University of Maryland. And you're listening to "The Diane Rehm Show." Ro, would you agree with those comments?
KHANNAWell, I think the president has been a leader on the environment, on health care, on consumer safety. So I certainly think -- and on regulating the financial industry. So, my view is that the president brings a pragmatic approach, which is neither ideological from the left or from the right. But to say, what are the regulations that are necessary for us to still have the safest, best products in the world that give made in America a cache and yet don't pose stifling economic constraints on business given that we're in a global competitive environment.
REHMAnd what happens in other countries, do they have the same kinds of regulations that we do? Are they stronger? Are they weaker? How would you compare?
KHANNAI certainly think they're weaker. You know, there was an anecdote that Andy Grove from Intel tells that when he goes to Malaysia, he deals with one person, Chet Singh, who takes care of all the regulatory and permitting issues. And he gets to put up a factory. And in China, you know, you often don't have to deal with environmental or human rights concerns. But there's a great quote from Richard McGregor of the Financial Times where he says, America's problem is not that it needs to work more like China, America's challenge is that it needs to work like America.
KHANNAAnd I think we can have the regulations to have a good environment, worker safety, good benefits and still compete if we are doing the right things on fair trade, if we are making the right investments in education, if we're making the right investments in infrastructure, if we have the right tax incentives. And I think this president has an unprecedented approach to a comprehensive manufacturing policy over the last 50 years.
REHMWhat about a country like Germany? For example, how do its regulations compare with ours and how did they manage, Rena?
STEINZORWell, in Europe, they've been very aggressive, especially on chemical policy. And it was interesting in Steve's report, one of the regulations that executives were complaining most about actually was not an American regulation, it was a European regulation. It's a program called Reach that requires testing, upfront testing of chemicals before they're put on the market. We don't do that in this country.
STEINZORYou can put an industrial chemical on the market without doing toxicological tests. And that's one of the reasons that we've let certain chemicals out that cause lots of trouble and it becomes more expensive to clean them up.
REHMThat sounds like even weaker regulation than we have.
KHANNAWell, you know, another study that we do every couple of years is on we compare the costs and the strength of regulations or a number of areas, our tax policy, regulations toward policy and such with other countries. We actually have -- we are easily the most expensive regulatory country in terms of pollution abatement, it costs much more so than in Europe. Needless to say, not much more so.
GOLDAnd I agree with Ro when it comes to -- when you have third world countries like China, they need to catch up and other third world countries need to catch up with our regulatory system. But I do want to say, you know, you can't -- you should not -- we got to be careful painting manufacturers as the bad guys, the polluters, the dangerous guys. This is why we've steered our youth away from going into manufacturing.
GOLDWe have the safest manufacturing sector in the world now. Again, this is -- it is the sector that provides middle class jobs. It's, you know, Rena mentions the financial sector. We're not the financial sector. We are the sector that creates products. People coming out of college who want to become engineers, who want to go into science, who want to go into math.
GOLDSo my concern is if we paint manufacturers as the boogeyman, which we do a very good job of in this country, we're not going to manufacture a lot in this country and a lot of kids are going to stop going into -- or they're not going to go into manufacturing.
REHMStephen Gold, he's president of the Manufacturers Alliance for Productivity and Innovation. We're going to take a short break here. And when we come back, we'll open the phones, read your email. I look forward to hearing from you.
REHMAnd we'll go right to the phones to Jessie in Wooster, Ohio. Good morning to you.
JESSIEGood morning and thank you for taking my call.
GOLDI think it's ironic that I just heard the manufacturing rep say that we have the safest manufacturing sector in the world. And I suppose that would be because it's so regulated for safety. And so that actually leads to my question is has manufacturing ever, of its own volition, of its own creative energies initiated a major reform in advance of regulation for safety, for the environment, for workers' welfare, all of that?
JESSIEWe often wonder about that 'cause I'm in a -- I'm 67. I'm in this new Jeep driving across Ohio and it occurs to me that for the last 50 years, I've lived through the regulatory explosion and it's impacted my life. This car cost $40,000. My first car cost about $3,000 and it had four wheels, a steering wheel and a radio and no seatbelts. And all I remember is that at every single initiative manufacturing had always said seatbelts are going to be expensive, emissions are going to be expensive. So I just want to know what does manufacturing...
REHMYeah, it's a good question, Jessie. Stephen.
GOLDWell, again, you know, needless to say manufacturers do work on a number of policies with policymakers and it's not just at the regulatory level. It's the legislative level. But, you know, society's evolving very fast especially over the last 25 years, new technologies. There has to be a number of areas in which manufacturers have actually implanted much safer without ever having to have regulators talk to them at all in terms of...
REHMCan you name one?
GOLDNo, I haven't. I'm not a regulatory specialist. We're a professional society. We do economic analysis so, you know, if there's a manufacturer out there, you know, or called somebody from another group or something, we're simply trying to raise the awareness of cost...
REHMYeah, okay. Rena, can you name one?
STEINZORI am a regulatory specialist. I've spent the last 35 years in the regulatory area and I honestly cannot name one. Perhaps getting rid of ozone-depleting chemicals, but that came under a tremendous amount of pressure, that was about 20 years ago.
STEINZORI think Desi (sic) makes a wonderful point that we oppose -- manufacturers opposed a lot of these initiatives, but destruction has not come in the path of that -- none of the dire stories have come true and we can take some hope from that.
REHMTo what extent, Stephen, what about tax cuts? Did they offset some of these regulations that you're very concerned about?
GOLDWell, we also have the most expensive tax code in the world when it comes to manufacturing. And the Japanese lowered their statutory rate earlier this year. And even the effect of -- or even our effective rate is -- on manufacturers is most expensive. So again, this isn't about -- this is simply trying to come up with an integrated approach to making manufacturing in this country more competitive.
GOLDAgain, I go back, we can paint manufacturers the bad guys but manufacturers have done an enormous amount of good in creating jobs, in creating -- the leading innovator in this country in term -- and without innovation, without the jobs, without the R & D, without the exports our economy would be a lot weaker.
REHMAll right. Here's an email from a small business owner who says, "In the last ten years, I've seen very little new regulation. I have ten employees. Republicans are conflating real small businesses with power plants, oil refineries or coal mines to make political points." How do you see it Ro?
KHANNAI think that's exactly right. I mean, small businesses account for about 50 percent of our manufacturing jobs. And if you talk to small businesses -- and I had the privilege of going around the country and meeting small business owners -- they will say, you know, we're having a challenge finding a skilled worker. We're having a challenge because we need more investment and infrastructure. We're having challenges because to export we need government help.
KHANNAAnd right now, there is an assault by the right on every government investment that people have espoused since Hamilton, that even Calvin Coolidge and Reagan championed. And the question is, what is the role that government can play to help small business owners that are the bedrock of the middle class? And I think that's the debate we ought to be having
REHMAll right. To Scott in Plymouth, Mich. Good morning to you.
SCOTTGood morning. I'm calling you from my local unemployment office. And my comment is that I think businesses have little incentive in the U.S. to be good neighbors from the top down. I mean, you know, we still, you know, get bank accounts from Bank of America, we still buy BP gas, you know, we still buy Dow Chemical stuff, you know. And really what it comes down to is, what is the financial incentive for the businesses? And I think that we don't essentially care enough to punish businesses that have corruption or that, you know, wreck the environment in some way.
SCOTTAnd just from my personal perspective, I don't want a job that comes at the cost of our coastline or comes at the cost of my own lungs as an asthmatic, you know. If I have to struggle with my family or if some business has to hire a few less people because of a regulation that prevents them from making a little bit of extra profit by, you know, dumping their toxic waste wherever they want, I'm willing to accept that.
REHMScott, tell me what kind of a job you're looking for.
SCOTTI'm a professional video editor. You know, I'm doing pretty well. I probably will pick up some independent jobs before I find a fulltime one. This is my first stop at our Michigan unemployment agency so our family will probably be okay for a while, but...
REHMWell, I certainly wish you all success. Do you agree, Rena, that businesses have little incentive to be good neighbors?
STEINZORI do and I would also say that there is a lot more that the government can do about the bad actors that Scott was talking about.
STEINZORWell, we continue to do business with BP. They have a ten-year history of violating this -- well, the Gulf was just the culmination of thousands of violations of environmental and worker safety laws. And yet we still buy about $2 billion worth of fuel from the company. They could be debarred under our laws. The government could stop doing business with them and that's not something that ever happens. So it's a kind -- there are lost opportunities to punish bad behavior and give room to the people that are doing it right that Steve is talking about.
REHMAt the same time David in Houston writes, "I'm general manager of a small business that employees 30. It's not just federal regulations, but federal, state and local regulation. I'm sitting on millions in cash. I've been struggling for two years to get permits to build a small two-story administration building on land that we own. The new building requires more parking spaces, then I have to put in two handicap parking spaces, then I have to add green space between the parking spaces.
REHMI'm also contending with water retention issues. If I can get this building built, I can reconfigure my factory to eliminate an upstream waste to comply with EPA regulations and then hire ten more employees." Ro.
KHANNAWell, you hear this from small businesses and there's no doubt that we have too complex a system on regulations. I mean, one of the companies I had profiled had to deal with 35 different agencies, local, state and federal to set up shop. Now partly we have a federal system of government so unlike China we can't just go and say -- the national government can't just say, get out of the way. We have local city council folks, state elected officials, federal officials. And what we need is each city, state and the federal government to work cooperatively to try to streamline the bureaucracy that people have to deal with.
KHANNAIn the Select America program, which frankly is a continuation of Invest in America that the Bush Administration started, is a step in that direction. But the person is absolutely right. There is too much complexity to our regulatory system.
REHMAll right. To Limerick, Maine. Good morning, Jane.
JANEGood morning, Diane. Thank you. Hello?
REHMYes, go right ahead.
JANEOh, okay. My comment is I think of regulations as protections and I wish we would call them protections instead of regulations. And I just want to add, as far as BP goes, BP Energy Company supplies fuel to our military. And I just saw the other day that a Humvee in Afghanistan gets 2.5 miles to the gallon. Now how is that helping? And so they all got the squeeze on us and they call the shots.
REHMAll right. Thanks for your call. Stephen Gold?
GOLDWell, I guess the question is -- I would definitely say regulations are protections. This issue isn't about whether we should have protection or not. This issue is about how do we maintain a competitive manufacturing sector in a globally competitive environment? And so again, you know -- and by the way, I think manufacturers have plenty of incentives unlike a lot of other businesses.
GOLDAnd you may talk about the huge global companies that don't care about where they're situated but a manufacturer that settles a plant -- that puts a plant in a certain community, it wants to hire workers. It needs to have the safest workforce in order to hire those workers. They have a skilled workforce shortage already. It needs to make sure it's not polluting the area because needless to say, it has to live within that community and maintain a good reputation. The manufacturers that we represent are -- understand that completely. There's a huge incentive.
REHMHere's an email from Peter in Arlington, Texas. He says, "Often what I hear from U.S. companies is a kneejerk reaction to any regulation no matter how beneficial it might be. Why is it that American companies seem paralyzed by regulations if you accept their rhetoric but other companies seem to thrive in regulation-friendly environments such as in Germany? Are their CEOs just smarter than the ones here in the U.S.?" Ro.
KHANNAWell, first of all, I think we underestimate how competitive we are with Germany. Our labor productivity is actually higher than Germany's and our manufacturing output is about three times Germany's. I also think, and here I agree with Stephen, that most American manufacturers, particularly small and medium sized businesses, want to do the right thing. They're in this because they want the pride of workmanship, the pride of making something. They want to contribute something back to the country.
KHANNAAnd what my concern is is if we deregulate, that's going to bring out the worst in manufacturers as a race to the bottom. But I think it's unfair to paint all manufacturers as sort of unconcerned with their communities.
REHMRo Khanna. His new book is titled "Entrepreneurial Nation: Why Manufacturing is Still Key to America's Future." And you're listening to "The Diane Rehm Show." Rena, I know you wanted to comment.
STEINZORWell, I think that there are -- no one's smarter than Americans, let's just start there. But I would say that I think that Stephen is right that we need to bring manufacturing to supported in this country. Unfortunately, the reason we're all here is because he has -- his group has joined this very misleading march to blame regulation as being the problem for industry in this country. And there are so many more important issues that we should be discussing rather than the narrative that the government is persecuting business and driving it into disrepair.
STEINZORI think that there is many important roles the government can play and the smaller government gets, the more underfunded it is, the more frustrated people will be when they try and deal with people in the government because there won't be enough people to move as fast as the gentleman in Arlington, Texas wants them to.
REHMWell, I must say, I was really, really struck by a front-page story in the New York Times on Saturday that the capitol dome is leaking in 1300 places. And you have the Senate saying let's fix it and the House saying we don't have the money. I mean, talk about a symbol of what the cost and the benefit becomes. It gets a little disgusting when it gets down to that. If you see the election as a vote on regulation how do you see it, Stephen Gold? Is president Obama going to be for more regulation that's going to hurt big business? Is Mitt Romney going to do away with those?
GOLDWell, no president has the power to do away with regulation. President Obama has, in fact, been a staunch supporter of manufacturing. I think he's really -- has come along over the last few years to understand more and more the important role manufacturing plays. I think either individual gets selected in November is going to -- I think has his work cut out for him in terms of trying to make us more competitive.
STEINZORThe Republican platform that was just adopted calls for President Romney to -- if he's elected to actually abolish regulations that are on the books. So I would hope that the Republican platform people would talk to Stephen because that's not possible for a president to do, but he'll try.
KHANNAI think that President Obama believes in sensible regulation and he's practical. And what I would hope for the Republican party is that they'd study their history because people like Alexander Hamilton were neither free-market purists nor big government. They were practical and that's what the Republican Party should get back to its roots.
REHMRo Khanna, author of "Entrepreneurial Nation," Stephen Gold. He is with the Manufacturer's Alliance for Productivity and Innovation. And Rena Steinzor, she's president of the Center for Progressive Reform. Thank you all so much. Thanks for listening. I'm Diane Rehm.
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