Paul Krugman debunks his own paper’s praise of Trump’s war on environmental regulation

"There is no evidence -- none -- that regulation actually deters investment."

President Donald Trump signs bill killing  the Stream Protection Rule February 16, 2017.  CREDIT: Ron Sachs-Pool/Getty Images
President Donald Trump signs bill killing the Stream Protection Rule February 16, 2017. CREDIT: Ron Sachs-Pool/Getty Images

On Monday, the New York Times published an absurd piece about President Donald Trump’s war on health and environmental regulations, ignoring the terrible human cost of Trump’s effort while claiming it is boosting business investment.

The front-page story is so egregious that one of the the paper’s leading columnists, Nobel prize-winning economist Paul Krugman, eviscerated it in a series of tweets on Tuesday morning.

The original piece claims that U.S. businesses are supposedly investing more in factories and equipment because Trump is rolling back existing regulations and promising to minimize new regulations.

“There is no evidence — none — that regulation actually deters investment,” Krugman tweeted, linking to Monday’s piece.

Krugman, who won the 2008 Nobel prize for his work in international economics, also tweeted out, “Internationally, the US is low-tax and low regulation compared with other advanced economies. We’re also relatively low investment,” along with this chart:

CREDIT: Paul Krugman

So how is the article able to quote so many business people claiming that regulations have undermined investment then? “There are, however, lots of reasons for businesses to SAY that regs they don’t like deter investment,” explains Krugman, adding, “this is especially true when they want to curry favor with an administration known to abuse its power to reward flattery and punish criticism.”

And while the original 1,900-word article characterizes regulations as bad for business, it fails to cite a single negative impact from efforts to protect Americans from polluted air and water, for instance.

Trump’s own Environmental Protection Agency concluded last fall that its effort to undo Obama’s climate plan could kill some 100,000 Americans over the next few decades — and lead to tens of thousands of more cases of asthma attacks and hospitalizations for children.

Instead of honing in on the very real threat to public health and safety from Trump’s war on regulation, the Times offers euphemisms: “Some businesses will essentially be able to get away with shortcuts that they could not have under a continuation of Obama-era policies.”

And since there is no actual economic evidence supporting the article’s thesis, the Times instead talks about perceptions and, bizarrely, “animal spirits” to support its claim that Trump’s war on regulations will somehow boost investment and jobs.

But in the administration and across the business community, there is a perception that years of increased environmental, financial and other regulatory oversight by the Obama administration dampened investment and job creation — and that Mr. Trump’s more hands-off approach has unleashed the “animal spirits” of companies that had hoarded cash after the recession of 2008.

The main problem with this analysis is that job creation has been substantially lower under Trump than under Obama, according to the Times’ own published data.

Just last week in its piece, “2017: The Year in Charts,” the Times had a section headlined “What Trump Hasn’t Helped: American Jobs,” which included this chart:

CREDIT: New York Times, using Bureau of Labor Statistics.
CREDIT: New York Times, using Bureau of Labor Statistics.

Finally, in a piece full of absurd claims, the reporters have one more. As an example of how “the administration’s actions will allow companies to engage in activities they might not have been able to otherwise,” the Times says electric utilities “might be able to invest in upgrading power plants that run on fossil fuels, thanks to a promised rollback of Mr. Obama’s Clean Power Plan to fight climate change.”

This is the exact opposite of reality. Krugman himself points out that “some kinds of regulation actually promote investment. Climate change policy should encourage renewables and conservation spending; Trumpist denial encourages just keeping the old coal plants.”

Precisely. Regulations encourage investment and innovation, something the Trump administration is working overtime to thwart. This could cost Americans millions of jobs.

And of course fighting climate change might actually avoid catastrophic impacts that would devastate America with up to 8 feet of sea level rise and 18°F Arctic warming, as the recently-released (and Trump administration-approved) National Climate Assessment explains. But, while the Times has nothing to say about future disasters, it wants you to know that the upside is that for a while at least businesses will feel “animal spirits.”