Filed under: Capitalism, Economy, Election 2012, Politics, Taxes | Tags: Job-Killing Regulation, Medical Device Taxes, Punish the Most Innovative
Of all the superlatives that describe the Obama administration, none surpasses the issuance of stultifying, job-killing regulation. Over the first two years of Obama’s term, the federal government issued 132 economically significant regulations (defined as having impact of $100 million or more per year). That averages out to 66 major new regulations a year, which is dramatically higher than the Clinton administration (47) or the George W.Bush administration (48). Business has protested, Congress has protested, affected industries have protested and the Chamber of Commerce has protested.
Obama’s regulatory czar. Cass Sunstein, announced rule changes last August to supposedly “save U.S. businesses billions of dollars in regulatory burdens.” Sunstein claimed that the regulatory relief would save business $10 billion over five years. File that with the claims of a turnaround in the job market, and the claim that denying the Keystone XL pipeline would save the environment. The real growth industry in the midst of this recession is bureaucratic regulation. Democrats have a hard time understanding consequences.
The administration’s regulatory excesses have been a disaster to some of our most productive and innovative companies. “A recent survey of venture capital firms”, said Dr. Henry I. Miller, “has revealed that they have begun to avoid investment in early-stage pharmaceutical and medical device companies, which are therefore increasingly moving overseas. Thirty-six percent of respondents said they plan to increase investment in life science companies in Europe, while only 13% intend to increase investment in U.S. companies, and 31% said they plan to decrease investment in life science companies in the U.S., compared with 7% that intend to decrease investment in Europe.”
Sixty-one percent of the investors cited regulatory challenges as the primary reason; more specifically, they alluded to dysfunction, unpredictability and risk-aversion at Obama’s FDA.
One metric that reflects what the drug companies are experiencing is the plummeting success rate of Phase 2 clinical trials — in which the efficacy of a new drug begins to be assessed; from 28% in 2006-07, it fell to 18% in 2008-10, according to an analysis in the journal Nature Reviews Drug Discovery in May. Facing regulatory uncertainty or obstructionism, companies are simply abandoning projects that might have yielded medically useful, profitable products. But regulatory excesses harm more than industries and companies.
The IRS Friday issued the rules for the new $20 billion ObamaCare medical device tax that is scheduled to take effect next year. As Obama celebrates a lower unemployment rate, and extols his new initiatives for innovation, the new rules are estimated to kill another 43,000 jobs. There are always consequences. Copy this down.
Capital will go where it is wanted and stay where it is well treated. It will flee from manipulation or onerous regulation of its value or use and no government power can restrain it for long.
The reforms don’t work, the regulations don’t stimulate, the decline continues. You cannot declare war on capitalism, and expect business to grow and prosper. They’ll just up and go somewhere where they are wanted. It takes a certain depth of experience to think through the consequences. You have to have some understanding of how an industry works, what their challenges are and how changes will affect them. You can, of course, decide to raise money by increasing their taxes, they have options as well.
It may surprise the administration, but companies are not in business to create jobs, nor to boost the economy, nor to make the administration look good. They are in business to make a profit by creating products that people need and want. You forgot the customer. You may have been excited about a product that your ideology told you was a great green good, but if nobody wanted it enough to pay the price, it’s just another flop, and the hopes and the jobs and the innovation were all a waste. And there are consequences for that too.
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