There is a debate in the United States at present as to whether government regulation on net creates or destroys jobs. See, for example, here. This is, of course, a completely silly debate.
To see why, let’s consider a simple regulation. How about the laws against murder? These laws clearly reduce employment opportunities. For example, if someone wishes to hang out their shingle as a ‘professional assassin’ then they are likely to violate the anti-murder regulations. They may draw attention from the relevant regulatory authorities and be punished. In the absence of this interference by regulators in the market, we could have a thriving trade in assassination. There could be an Assassins’ Guild (with apologies to Terry Pratchett readers) with the associated jobs. (Murdering, body disposal, weapons production and training, private security to protect against assassination, and so on).
Aaaahhhhh, I hear you say. But what about the jobs created by the anti-murder regulations? After all, we need a police force to ensure the regulations are being satisfied. And think of all the lawyers that are employed due to our anti-murder regulations. Indeed, a significant part of our legal system – with associated jobs – would not have a function in the absence of anti-murder regulation.
So are our laws prohibiting merger job creating an job reducing?
As I’ve already said, this is a silly question. Regulation is about improving the functioning of our economy and our society. For example, antipollution laws (like anti-murder laws) are about internalising a negative economic externality. Whether they are good or bad laws has nothing to do with jobs.
This point is eventually made in the Washington Post article – at the end of the third page. It quotes Roger Noll, a leading economist at Stanford University.
“The notion that we should deregulate everything because we have a recession is completely wrongheaded,” he said. “Whether a regulation is a good or bad idea is not a function of employment in the industry being regulated.
“The right question is: On balance, does our society benefit?”
It is sad that it takes three pages of silliness to get to the correct argument.