Of Refrigerators & Regulations

For those interested in the President's remarks to the U.S. Chamber of Commerce and his views on the shared responsibilities of government and business to the American people, our post earlier will give a suitable overview.  For those interested in the details of the President's Executive Order on reviewing regulations and their impacts on the economy, Cass Sunstein's post this morning will also be of value.  But the President also took a moment during his speech to put the debate over regulation in a different perspective, and to break through the false dichotomy so often assumed between prosperous business on the one hand, and common sense rules of the road on the other:

Transcript below:

Few of us would want to live in a society without rules that keep our air and water clean; that give consumers the confidence to do everything from investing in financial markets to buying groceries.  And the fact is, when standards like these have been proposed in the past, opponents have often warned that they would be an assault on business and free enterprise.  We can look at the history in this country.  Early drug companies argued the bill creating the FDA would “practically destroy the sale of … remedies in the United States.”  That didn’t happen.  Auto executives predicted that having to install seatbelts would bring the downfall of their industry.  It didn’t happen.  The President of the American Bar Association denounced child labor laws as “a communistic effort to nationalize children.”  That’s a quote.

None of these things came to pass.  In fact, companies adapt and standards often spark competition and innovation.  I was travelling when I went up to Penn State to look at some clean energy hubs that have been set up.  I was with Steve Chu, my Secretary of Energy.  And he won a Nobel Prize in physics, so when you’re in conversations with him you catch about one out of every four things he says.  (Laughter.)

But he started talking about energy efficiency and about refrigerators, and he pointed out that the government set modest targets a couple decades ago to start increasing efficiency over time.  They were well thought through; they weren’t radical.  Companies competed to hit these markers.  And they hit them every time, and then exceeded them.  And as a result, a typical fridge now costs half as much and uses a quarter of the energy that it once did -- and you don’t have to defrost, chipping at that stuff -- (laughter) -- and then putting the warm water inside the freezer and all that stuff.  It saves families and businesses billions of dollars.

So regulations didn’t destroy the industry; it enhanced it and it made our lives better -- if they’re smart, if they’re well designed.  And that’s our goal, is to work with you to think through how do we design necessary regulations in a smart way and get rid of regulations that have outlived their usefulness, or don’t work.