The disconnect between concern for regulations and consumer demand

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    Oct 25, 2011 11:19 AM GMT
    OK, before anybody else says that the Fox News mantra has finally sunk into the subconscious minds of small business owners, here's the latest Gallup poll:

    But if complying with regulations is so important, why does consumer demand trump regulations when it comes to new hires or a "thriving" business for 2012?


    Another way to put it: is the conclusion that Gallup has about the above:
    same page
    Small-business owners' assertion that government regulations are the most important problem facing them today is consistent with another recent Gallup poll (Oct. 6-9) in which 14% of Americans volunteered that reduced government regulation is the best way to create jobs in the U.S.

    consistent with their results, when CLEARLY consumer demand is what small businesses regard as what drives new hires? Note that the 3rd pic shows that a decrease in regulation isn't even mentioned as something that would generate new hires.
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    Oct 25, 2011 8:44 PM GMT
    I think I finally got it.

    Businesses, large or small, have the following concerns in mind, in order of priority:

    1. Profits (hence the perennial concern about taxes and regulations)
    2. A thriving business (i.e. your business can presumably be stagnant and yet generate plenty of profits)
    3. A thriving economy and low unemployment (hence: "if you don't have a job don't bother applying")

    Hence the disconnect.

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    Oct 25, 2011 8:57 PM GMT
    Then again, a single n=600 poll isn't the whole truth, as 3 other surveys have different results. In the September survey of small business owners by the National Federation of Independent Businesses, more than twice as many respondents cited poor sales (29.6 percent) as their largest problem than cite regulation (13.9 percent).
    In an August survey of economists by the National Association for Business Economics, 80 percent of respondents described the current regulatory environment as “good” for American businesses and the overall economy.
    As noted above, in a recent Wall Street Journal survey of economists, 65 percent of respondents concluded that a lack demand, not government policy, was the main impediment to increased hiring.
    According to data from the Bureau of Labor Statistics, less than three-tenths of 1 percent of mass lay-offs in the second quarter of this year were due to government regulations or intervention. [2]
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    Oct 25, 2011 9:20 PM GMT
    Here's one concrete example where a missed opportunity for tighter regulation would have prevented a "public health nightmare" that will still unfold in the years to come. In this case, as many others, desire for profit trumped everything else. recent, but not rare, example provides a cautionary tale about the challenges of ensuring that complex medical devices are both effective and safe. Osteoarthritis of the hip joint is a common and debilitating disorder. Each year, nearly a quarter of a million patients with advanced painful arthritis receive a total hip replacement in the hope that it will restore mobility and improve their quality of life.1 Conventional artificial hip implants consist of a metal ball inserted into a plastic cup. In 2005, a new metal-on-metal design was introduced in which both components were made from a metal alloy. The design was touted as a major innovation that would improve durability and reduce the risk of hip dislocation — advantages that were especially appealing to younger patients but were never tested.

    One metal-on-metal design is the DePuy (Johnson & Johnson) ASR XL Acetabular System, which was introduced into the U.S. market in 2005. The ASR was cleared by a Food and Drug Administration (FDA) process known as 510(k), which refers to the section of the 1976 Medical Device Amendments to the Federal Food, Drug, and Cosmetic Act that created it. Under that section, the criterion for clearance of a new medical device is that it be “substantially equivalent” to an already-marketed device (a “predicate”); clinical data are not required.

    The ASR was constructed by borrowing a metal alloy cup from a different hip device known as the ASR Hip Resurfacing System and retrofitting it onto a standard hip implant. The manufacturer successfully made the case that the re-engineered implant was “substantially equivalent” to a predicate device. Its marketing clearance was therefore based not on clinical trials or other clinical data but on bench testing in a laboratory, which was inadequate to simulate the stresses that would be placed on it in patients' bodies.

    It soon became clear that the device failed at the astonishing rate of at least one in eight. According to a recent report presented at the British Hip Society Annual Conference, 21% of these hips have had to be replaced (revised) by 4 years after implantation, and the revision rate rises to 49% at 6 years, as compared with 12 to 15% at 5 years for other devices.2 Failure appears to be due to erosion of the metal in the articular surfaces and migration of metallic particles into the surrounding tissues and the bloodstream. Thus, the innovation led to tragedy for many patients.3 Before it was recalled in 2010, the ASR had been implanted in nearly 100,000 patients, and the result was a public health nightmare.

    The ASR is a class III device — the FDA's highest risk classification. Clearance through the 510(k) process is especially inappropriate for such risky devices. Congress envisioned that class III devices would be approved through the more stringent premarket approval (PMA) process, which does require clinical testing, and the Safe Medical Devices Act of 1990 requires that the FDA either use the PMA process for class III devices or reclassify them in a lower-risk category. Despite the clear intent of Congress, high-risk devices continue to slip by this requirement.

    And any attempt to correct this sad state of affairs is not going to succeed any time soon:

    same quoteOn July 29, 2011, the Institute of Medicine (IOM) released an FDA-commissioned report on the 510(k) clearance process.4,5 The report concluded that it was impossible for 510(k) clearance to assure safety and effectiveness, because it assesses neither, instead establishing only “substantial equivalence” to an existing device. The report therefore recommended that 510(k) clearance be eliminated. In addition, it recommended monitoring medical devices throughout their life cycle, especially during the postmarketing period. Despite its reasonable (and relatively modest) recommendations, the report has been aggressively attacked by the device industry and by politicians from states where device companies are located. In fact, the attacks began even before the report was released, which is highly unusual for an IOM report.
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    Oct 25, 2011 9:26 PM GMT
    And who says that regulations cost more than their benefits? Case by case analysis is what's needed. seems to me that a general opposition to regulation is no more satisfying than a general inclination towards regulation. Instead what we'd prefer is a general push for careful cost-benefit analysis of potential regulations—better regulations. The Economist is currently hosting a discussion on the merits of higher bank-capital requirements in which one discussant, Jean Pisani-Ferry, notes a finding that, "starting from current levels of capitalisation, a one percentage-point increase in the capital ratio would permanently reduce the frequency of crises by one-third", at minimal cost to potential borrowers. That seems like a good trade-off! I have to say I'm pretty pleased with a number of other regulatory barriers. I'm happy about restrictions on various industrial pollutants. I rather appreciate some of the rules that govern auto safety standards. I'm glad that various kinds of discrimination are prohibited.

    I don't know that an absence of regulation is clearly better for the disadvantaged; reflection on the 19th century leads me to believe that the powerful are roughly as good at exploiting the lack of rules as they are the rules. What I'm interested in, then, is a clear set of metrics for regulation, focused on cost-benefit analyses, and designed to preserve a liberal and efficient economic order.
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    Oct 26, 2011 12:57 AM GMT
    And of course conservatives don't complain about onerous regulations...when it's about abortion clinics.
    Lest women should suffer psychological damage (?) from having their abortion in a room with too low a ceiling or the frustration of not finding enough parking (after the protesters have taken up their spots): such as Mr. McDonnell and Attorney General Ken Cuccinelli II love to pummel what they see as the regulatory zeal of liberals. But in this instance they have outdone liberals in supporting the imposition of punitive and meddling rules under the pretext of protecting women’s health but without providing an iota of evidence that women were endangered to begin with. First-trimester abortions, which account for the overwhelming majority of procedures performed in the state, are extremely safe, requiring hospitalization for complications in only the rarest of instances.

    The rules will require existing clinics to meet construction and design standards mainly intended for new hospitals — not existing outpatient facilities such as abortion clinics. The rules mandate the minimum width of hallways; ceiling height; the size of operating rooms; numbers of parking spots; and other requirements that will be physically impossible, or prohibitively expensive, for many clinics to satisfy. Mr. McDonnell can make changes to the board’s recommendations but is not expected to alter them significantly.

    In nearly all past cases, the state differentiated between existing structures and newly built ones when imposing fresh building standards. In this instance — and without demonstrating any need related to patient care and safety, urgent or otherwise — that practice has been thrown out.
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    Oct 26, 2011 1:52 AM GMT
    I think that your point on the disconnect is right on the mark. The other major aspect of this is the use of wedge issues by the Republican party to gain a political advantage which leads to votes. Several years ago the Republican Party's favored wedge issue was gays and marriage between one man and one woman.

    Now its Usefull for the Republican Party to not only use tho old wedge issues as far as possible, but now they are pushing the wedge issue of the poor against the rich, the poor against the corps. and this propaganda that the Government regulations and taxes are whats holding back the economy, hiring and business expansion.

    To my way of thinking, this whole issue is nothing but highlighting propaganda for the purpose of winning an election. Bringing about Obama's 'Waterloo'. These people know good and well that if they keep repeating the same false claims, that the gamble is in their favor that more will believe it than not. A propaganda lie well put together and well advertised will trump the truth everytime, this works in part because there's always more effort put into advertising the propaganda, than there is into spreading the truth, because people always assume that truth will stand on it its own, but sadly not against a well funded and repeated lie.
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    Oct 27, 2011 12:25 AM GMT
    The Obama regulatory tsunami...compared to the Bush Sr. tsunami:’s White House approved 613 federal rules during the first 33 months of his term, 4.7 percent fewer than the 643 cleared by President George W. Bush’s administration in the same time frame, according to an Office of Management and Budget statistical database reviewed by Bloomberg.

    The number of significant federal rules, defined as those costing more than $100 million, has gone up under Obama, with 129 approved so far, compared with 90 for Bush, 115 for President Bill Clinton and 127 for the first President Bush over the same period in their first terms. In part that’s because $100 million in past years was worth more than it is now due to inflation, Livermore said.

    In the last 12 months through the end of September, the cost range of new regulations is estimated to be $8 billion to $9 billion, a decrease from 2010, according to non-partisan Government Accountability Office reports analyzed by Bloomberg. That total put the average annual cost of regulations under Obama at about $7 billion to $11 billion, compared with the $6.9 billion average from 1981 through 2008 in current dollars, according to the OMB data.

    The record came in 1992 under George H.W. Bush when that total hit $20.9 billion in current dollars. In the last year of Ronald Reagan’s term it was $16 billion in today’s dollars.