Is red tape killing the recovery? Probably not, no

The idea that regulation is the problem is simplistic, overstated, and misapplied.

The argument goes like this: Our wealth creators are chomping at the bit to hire more people, produce more output, and sell more stuff. The only problem is that nasty government regulations are stopping them from doing it. Scrap those regulations, and bust turns to boom!

It's an appealing argument to many in the Conservative party, because it has the side effect of shifting the blame for slow growth from macroeconomic policies—particularly the historic failure of austerity. It also lets Tories express sympathy with the aims of policies like a minimum wage, health and safety regulations, or employment protections, without actually committing to keep them.

Small wonder that Conservatives as diverse as Louise Mensch, party donor Adrian Beecroft and the Institute of Directors think-tank have all expressed a desire to slash "red tape", particularly when it comes in the form of regulations protecting employees against their bosses.

But their starting premise is wrong. Business executives—the archetypal "wealth creators" if any are—aren't chomping at the bit to deregulate. In fact, they're far more concerned about their inability to borrow and the difficulty they have paying taxes, as they tell the World Economic Forum:

It's not just big businesses. In August 2012 the Department for Business, Enterprise and Skills asked 500 heads of small and medium sized enterprises about what they considered the main obstacle to success. “The state of the economy” was the biggest issue, listed by 45 per cent and “obtaining finance” was next, mentioned by 12 per cent. After this came taxation, cashflow, competition and regulations—just 6 per cent listed regulations as their main concern.

In Britain, part of the reason businesses don't care about red tape is that it's all part of the level playing field. The minimum wage doesn't hurt small businesses if all their competitors have to pay it as well. But, as Louise Mensch points out, there's the international context to take into account as well:

"The left think they're helping working people by providing more rights", she told the Observer in 2011. "But all that actually happens is you create poverty and despair, because jobs go to your competitors who have fewer rights for workers."

In fact, you have to look hard to find competitors to Britain who have fewer rights for workers. By international standards, the UK is not heavily regulated at all. In fact, when the OECD assessed the strength of employment protections across all its member nations, the UK was third from the bottom. Apart from the US and Canada, we have the least employment red tape in the developed world:

And when we look at the protections workers have against unfair dismissal – a specific protection attacked by Adrian Beecroft’s 2011 report on employment law – the UK is even closer to being the “freest” nation in the world. Only the US has fewer protections than us:

But the most important aspect of regulations is frequently missed in discussions of whether they hurt businesses: regulations have direct benefits. It's a point made alarmingly infrequently in a climate where the burdens of regulations are brought up on a monthly basis.

For instance, the minimum wage has costs—to businesses, which have to pay higher wages, but also theoretically to workers, who may find that they aren't employable for that much. The minimum wage also has benefits. It boosts the income of the lowest paid and as such is a very effective way to boost aggregate demand. It can also increase productivity in a number of ways.

None of this should obscure the most important point: the poorest paid people in society suddenly have more money. That's not a by-product; it's the entire aim. And discussing what businesses think about the burden without acknowledging that benefit will always result in a skewed conclusion.

For more, take a look at our article produced with nef and the Tax Justice Network as part of their "Mythbusters" series, addressing the myth that "red tape" is preventing the recovery.

Some red tape. Photograph: Getty Images

Richard Exell is a senior policy officer at the TUC and Alex Hern is the New Statesman's economics reporter.

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Barack Obama throws a Reaganesque baton of hope to Hillary Clinton

The 44th President's speech backing Clinton was also his swan song. 

Barack Obama looked at ease as he stepped up to praise Hillary Clinton and endorse her as the Democratic Presidential nominee.

To an upbeat soundtrack by U2 and cheers of his 2008 campaign slogan, "yes we can", he took to the podium at the Democratic convention. 

Borrowing the sunny optimism once so skilfully deployed by Republicans, Obama struck back against Republican nominee Donald Trump's "deeply pessimistic vision" of the United States.

He declared: "The America I know is full of courage and optimism and ingenuity. The America I know is decent and generous."

Like his wife Michelle, Obama painted Clinton as a grafter who wasn't in it for the fame. 

He praised her campaign when they were rivals for the Democratic nomination in 2008, and said that when she served as a member of his team he had "a front-row seat" to her intelligence, judgement and discipline. 

He declared: "I can say with confidence there has never been a man or a woman, not me, not Bill, nobody more qualified than Hillary Clinton to serve as president of the United States of America."

He then joked to Bill Clinton, the former President, who was standing applausing: "I hope you don't mind, Bill, but I was just telling the truth, man."

The two-terms President continually urged Democratic voters, many of whom originally backed Bernie Sanders, to get out and vote. "Democracy isn't a spectator sport," he said.

But while Obama was there to add some sparkle to the Clinton campaign, it was also an opportunity to shape his legacy. 

Commentators have often compared Obama to the popular Democratic President John F Kennedy, or the less popular but idealistic Jimmy Carter. 

Obama, though, has in the past praised the Republican President Ronald Reagan for changing the trajectory of US politics. 

In his speech, he borrowed from the "eternal optimist" to compare the Democrats with the Republicans. 

He said: "Ronald Reagan called America "a shining city on a hill." Donald Trump calls it "a divided crime scene" that only he can fix.

"It doesn't matter to him that illegal immigration and the crime rate are as low as they've been in decades, because he's not actually offering any real solutions to those issues. He's just offering slogans, and he's offering fear. He's betting that if he scares enough people, he might score just enough votes to win this election."

Obama praised a diverse country, where immigrant cultures combined: "That is America. That is America. Those bonds of affection, that common creed. We don't fear the future; we shape it, embrace it, as one people, stronger together than we are on our own."

The 44th President bowed out by referring to his 2008 campaign of hope, and telling voters "America, you have vindicated that hope". And he thanked them "for this incredible journey":

"I'm ready to pass the baton and do my part as a private citizen. So this year, in this election, I'm asking you to join me, to reject cynicism and reject fear and to summon what is best in us; to elect Hillary Clinton as the next president of the United States."

There is no doubt that Obama's warm audience was ready to pick up that baton and pass it on. Whether the wider country will be warmed up enough by his Reagan rhetoric remains to be seen. 

You can read the full speech here