A bit off-topic -- but related to some arguments about environmental regulation -- is a letter to the WSJ's Numbers Guy (by the way, if you're not reading The Numbers Guy ... why not?):
And here's a letter about my prior column on the costs of Sarbanes-Oxley:
I'm an accounting major (hoping to reap a windfall from SOX work once I graduate), so maybe I'm biased -- but these executives who whine to high heaven about compliance costs are full of it. The reason Congress felt it necessary to enact the legislation was that greedy executives refused to behave themselves. If they're upset, well, think of the people whose pensions are worthless because of what they did at Enron, WorldCom, etc.
The other issue is that in terms of the economy as a whole, SOX work will actually be a boon -- because it transfers large amounts of money from corporate coffers to the pockets of consultants, who go right out and spend it! This is exactly what happened with all that Y2K programming work (also decried by executives as a big waste of money). I think it gave a huge Keynesian boost to the economy -- possibly delaying the collapse of the '90s bubble by a year or two. SOX spending will do, or is doing, the same thing.
Actually, no, this isn't a "huge Keynesian boost to the economy" but a common misconception. These expenses are a cost to the economy, not a benefit. Gross domestic product (GDP) is the value of the final output in an economy over a given time period. Regulated firms are the producers of the final output (Q) such as cars and televisions. When regulations are imposed on these firms output does not increase. Instead, as the firm must shift some of its focus away from producing their Qs and toward abiding by the regulations, their costs of producing the Qs go up and production may actually fall (indeed, it does fall; see the working paper Regulation and the Macroeconomy).
Consider the example of the Exxon Valdez oil spill (will we ever grow tired of using this as an example?). Millions of dollars were spent on clean up. Using the argument above some argued that this was a benefit to the economy since it increased jobs and spending ("because it transfers large amounts of money from corporate coffers to the pockets of [fill in the blank], who go right out and spend it!"). Yikes! What do you think the corporations do with the money, burn it?
Exxon spilled oil which was a mess. Enron cooked the books which was a mess. Government tries to regulate to clean up the mess. The regulations are good ones (i.e., "efficient" to the economist) if the benefits exceed the costs and if the regulatory costs are as low as possible. The trick, then, is to regulate only when the benefit-cost analysis says that it is OK (benefits > costs) and to design regulations that achieve the goal at the lowest possible cost.