Weekend March 12, 2016
How the EPA is Contributing to Global Warming!
By
Alan M. Preston, MHA, Sc.D.
The mission of Environmental Protection Agency (EPA) is to protect human health and the environment. The EPA came into existence during the 1970s under the Nixon administration. It seems there is an impression that only Democrats care about the environment. It may surprise some that Richard Nixon, the 37th President, was a Republican.
To put things in perspective, the early 1970s was a time when there was a lack of respect to the environment by big and small factories alike. They polluted the air and water with impunity in many cases. Setting minimum standards and doing the right thing is usually viewed by most, as an important function of government. Democrats and Republicans alike support the protection of human health from toxic chemicals and the environment from contaminated air and water. The question that companies in the USA are now trying to cope with, is how much protection is too much?
We truly live in a global interactive world. With the advent of the internet, many jobs that required a physical presence at a particular company can now be performed anywhere in the world. Also, offshore outsourcing in the manufacturing world can be performed in many places other than the USA. Why would a company want to offshore some or all of their production?
This question does not have a simple answer. Some of has to do with cheaper labor, though the US still leads other countries in productivity. Thus where we lack in cheap labor costs, we make up for much of it in productivity. Another reason that companies perform some of the activities overseas is due to regulatory compliance. The EPA is one of those agencies that is squarely in the middle of costly regulatory compliance.
The National Association of Manufacturers (NAM), reports the macroeconomic impact of federal regulations. They produced a study that reveals the extent to which manufacturers bear a disproportionate share of the regulatory burden, and that burden is heaviest on small manufacturers because their compliance costs are often not affected by economies of scale. The analysis finds that the average manufacturer in the United States pays nearly $19,564 per employee per year on compliance
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costs. On an annualized basis, if we added up all the manufactures in the USA, the aggregate costs are about 2.028 trillion dollars! Imagine how much cheaper products would be if the manufactures did not have to spend their precious capital on regulatory compliance.
Of the EPA’s 24 air rules, the highest estimated costs are for: the Clean Air Fine Particle Implementation Rule issued in 2007; the Clean Air Interstate Rule issued in 2005; and the National Emission Standards for Hazardous Air Pollutants From Coal- and Oil-Fired Electric Utility Steam Generating Units (“Utility MACT”) issued in 2011. These rules are the costliest of all of the EPA rules. The Utility MACT rule, which is estimated to be the costliest of the EPA rules, has annualized costs of about $8.2 billion (2001) according to the White House. The White House attempts to rationalize the benefits to the public by suggesting there will be less costs because the earth will not be as warm and general population health will improve. The rationalization is illogical. Imposing such stringent regulations on US manufacturing in order to cool the planet is a senseless argument, particularly if other parts of the planet, like China, are spewing more toxic greenhouse gasses than we are saving. However, the benefit calculations are superfluous at best. According to the White House, in fine print, is a statement that claims the lack of scientific rigor in their estimates. “Many constituents of particulate matter (PM) can be linked with multiple health effects, and the evidence is not yet sufficient (emphasis added) to allow differentiation of those constituents or sources that are more closely related to specific outcomes”. U.S. Environmental Protection Agency (U.S.
EPA). 2009. Integrated Science Assessment for Particulate Matter (Final Report).
The take away from the report is that the government wants to protect you by imposing very stringent regulations on businesses and the business rarely have such “protections” inure to the benefit of the business. The protections they claim are about healthcare benefits that inure to citizens of the USA (and millions of non-citizens that are here illegally). Thus, the amount of healthcare “benefit” for the public that is calculated by the federal government is unproven and furthermore has no direct benefit to the manufacturer who is compelled to comply with such mandates. So for the manufacturer, the costs are absorbed 100% by the manufacturer or business until they get passed on to the consumer (a hidden tax every time you make a purchase of anything made in the USA).
Many Americans do not understand why companies are outsourcing large components of their operations overseas. One could argue that the general public appears to be schizophrenic. On one hand, consumers want and demand inexpensive products; on the other hand, they want items made in the USA, which for
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many products, if they were made here in the USA, the cost would be significantly more. (Think about the apple I-Phones as an example). The biggest driver to offshore outsourcing is government regulation. The pace of agencies issuing new rules and regulations has hit a record high under President Obama, whose administration’s rules have filled 468,500 pages in the Federal Register. And according to the Washington Post, over the past 2 ½ years, the Obama administration has published thousands of rules. There’s a problem, however, technically speaking, about 1,800 regulations shouldn’t be in effect, because they weren’t reported to Congress as required and thus should be considered illegal.
And the effect of all of these regulations (legal and illegal) drive companies to outsource overseas. And if anyone who has personally visited China or India, the two largest countries that are the recipients of the USA outsourcing, have observed pollution at unprecedented levels. If the EPA would back off a little bit and allow industries to catch up and allow the market to adjust, more products would be produced here in the USA and more jobs would be available to US citizens. In December of 2015, China issued a code RED regarding the air pollution which the reach of the China air pollution can be felt in California.
If the EPA would become less militant in their regulatory heavy hand, there would be less incentive for US companies to outsource. The EPA has been driving companies overseas for years. When a company outsources some of its manufacturing to China or India, they increase more pollution which effects Global Warming. China will be happy to make the product; however, the byproduct of pollution they create is 100 times worse than if that product was made here in the USA with 2001 regulations. Somehow the EPA in their effort to protect the environment is destroying the environment in India or China. The EPA seems to think the USA is somehow not impacted when China or India pollutes at increasingly higher levels. Forcing US companies to move their manufacturing overseas does not help the environment; rather it adds to global warming by other countries.
Now is the time for heavy handed regulations to end and a better business friendly environment is created. This will attract companies to come back to the USA and make products here again. If manufacturing came back to the USA, not only would it improve the impact on air and water pollution, it would create thousands of jobs.
And placing tariffs (as Trump as suggested) on companies in an effort to force them to keep their manufacturing here in the USA will be a disaster for the USA. All that will do is increase the price of all
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goods entering the US from other countries. Who has to pay for the increase of prices of the products that come to the USA? You, the consumer. It will cost you a lot more to buy a car, an I-phone, a TV, a computer, clothes, or any other kind of durable good. And after the tariff is placed, the US company will still not relocate their manufacturing to the USA, unless the EPA and other regulations are relaxed.
Thus, until the EPA and other agencies relax their regulations, US companies will be forced to have components of their manufacturing go overseas to places like China and India (as well as many other third world countries). And when the manufacturing goes to places that pollute more than the USA, the EPA is indeed complicit in contributing to global warming.
