For all you haters who love to hate on the notion that jobs are costs, Tyler Cowen:
That is one of the news stories of the end of this week, namely that the Trump administration eliminated a previous Obama administration ruling on this, see Brad Plumer for details. That sounds horrible, doesn’t it?
I took a look at the cost-benefit study (pointed out on Twitter by Claudia Sahm, or try this link, and please note it was prepared by consultants, not by the government itself). I spent some time with these hundreds of pages, and they are not always easy to parse (my apologies to the authors for any misunderstandings). Anyway, I quickly came upon this and related passages (p.45, passim):
In summary, the Final Rule is expected to reduce employment by 124 jobs on average each year due to decreased coal mined while an additional 280 jobs will be created from increased compliance activity on average each year.
Of course those “newly created jobs” are a cost, not a benefit, and should be switched to the other side of the ledger. That is not what this study did. And if I understand p.4-31 correctly, this study is using a multiplier of about 2. This approach is completely wrong, and if it were right Appalachia would love a lot of this coal regulation for its job-creating proclivities, but of course the region doesn’t.
The claimed annual benefit from the changes, from the side of coal demand (not the only effects), is $78 million, fairly small potatoes. Note the study doesn’t consider what are commonly the most significant costs of regulation, namely distracting the attention of managers and turning companies into legal and regulatory cultures rather than entrepreneurial cultures. The study does mention uncertainty costs from regulation, although I could not find any quantification of them.
Furthermore, I am not able to scrutinize the introductory section “SUMMARY OF BENEFITS AND COSTS OF THE STREAM PROTECTION RULE” and figure out the final assessment of net benefits for the rule and where that assessment might come from. I find that worrisome, and paging through the study did not put my mind at ease in this regard.
The study (from Industrial Economics) punts on estimating the benefits of water quality improvement from the stream rule. This seems odd to me, since a fairly reliable range of benefit estimates could be constructed using benefit transfer methods.
