Americans Like Regulation

By James Kwak

It’s a well-known fact that Americans oppose government spending in the abstract yet favor virtually every government spending program. For example, last April Gallup reported that 73 percent of Americans blame the deficit on excessive spending and 48 percent wanted to reduce the deficit mainly through spending cuts (and 37 percent equally with spending cuts and tax increases). Only a few months before, however, Gallup also reported majorities opposed to cutting spending on anything—even “funding for the arts and sciences”—except foreign aid.* (This is not an isolated poll; see, for example, Washington Post-ABC News, April 2011, questions 14 and 17.)

Most government spending does go to popular programs like Social Security, Medicare, and Medicaid. I suspected, however, that most Americans would want to cut spending on federal regulatory agencies; I thought that they just overestimated the amount of spending on regulation, which is tiny compared to the large mandatory spending programs. (The Consumer Financial Protection Bureau, for example, last year put in a budget request of around $300 million—less than one-one-hundredth of a percent of total federal spending.)

It turns out I was wrong. According to a recent study by the Pew Research Center for the People & the Press (hat tip Harold Meyerson), a small majority (52-40) thinks that government regulation does more harm than good. When you look at every actual type of regulation, however, people wanting stronger regulations vastly outnumber people wanting reduced regulation, and there is little noticeable shift since 1995—another year of intense anti-government sentiment. 2-23-12 #18

So, it turns out, Americans feel about the regulation the same way they feel about government as a whole: they don’t like the idea in the abstract, but they like it in concrete form. This shouldn’t be too surprising. Of course people want stronger food safety regulations when they read stories about people dying from tainted food; of course they want stronger environmental protections when they hear about toxic groundwater. At the same time, exactly half of the political establishment has been on a crusade to demonize regulation in general for the past forty years.

Now, you can’t really blame people too much for holding internally contradictory views about the government spending or about regulation; it’s not their job to understand where their money goes or what the government does. That’s one reason we wrote White House Burning chapter 4 is basically dedicated to trying to explain where our tax dollars go. Only with that kind of basic baseline understanding can we have any kind of sane discussion of fiscal policy.

* The foreign aid figure is also misleading, since Americans typically overestimate foreign aid spending by a factor of twenty-five.

17 thoughts on “Americans Like Regulation

  1. For decades, Americans have also hated Congress but liked their individual senators and representatives.. Hated the media but liked their news anchors. It’s almost expected, these days, to hate generalities and like specifics.

  2. A pessimist looks at this and concludes that the American electorate is composed of idiots. An optimist looks at this and concludes that our politicians and the government are pretty adept at responding to the inconsistent demands of voters.

  3. Dislike the unfamiliar and abstract and like the familiar? Isn’t there a logical fallacy for that?

  4. This analysis suggests a winning political strategy for Democrats and other good-government advocates: always stress the concrete and avoid abstractions. This seems a little bit contrary to the typical political advice of: don’t be too detailed because then you give your opponent something to attack.

  5. Of the 22 O.E.C.D. member nations, the average percentage of GNI spent on foreign aid is 0.49% (per capita spending), the US citizen average is 0.21%, Norwegians, at the top of this list, spend 1.10% (2010 O.E.C.D. figures). And so, while the average citizen of the First World spends more than twice what the average American citizen does, with the average Norwegian giving nearly 6 times as much, Americans will commonly complain that their charity to foreigners is burdensome… even though US citizens actually gain more from the global economy than any people in the history of the world. And to make this greed-driven hypocrisy even worse, the US hides military and intelligence spending in its ‘aid’ programs. This being quite obvious by comparing the aid recipient lists of countries like Norway (most spending directed at Africa), to that which reads like a list of nations where the US is involved in conflicts and/or conquests.

    My point being that if we can’t “blame” the citizenry of a democracy… then is it really a democracy at all? Did not the Germans under Hitler’s ‘spell’ use conformist excuses like this one:
    “Now, you can’t really blame people too much for holding internally contradictory views about the government spending or about regulation; it’s not their job to understand where their money goes or what the government does.”

    Obviously, I strongly disagree. These are the very types of delusional excuses that destroy democracies.

    Raymond L. Love

  6. joedee,

    I clicked on the link that you provided and I have an applicable comment but the comments are closed over there, so… I’ll just say my piece here and now.

    I suspect that the following sentence has a clue, as to why it might be best, to not put any more Republicans in the White house anytime soon:”Could you imagine if John McCain was president and how the so called anti-war movement would be camping out in the streets protesting?”

    Do you see the problem? If “McCain was president”… then he would no longer be president. I suppose if he were to have been elected, that middle-school English teachers would have attacked the White house by now so as to stop the illogical abuse of our language that seems to come from the Right, all too frequently. Not to suggest that Lefties are totally free of guilt in this area, but solecisms of such a basic nature, considering the mess that GW made, should at least avoid the vicious circle effect of the subjunctive mood!

  7. simonator said, “A pessimist looks at this and concludes that the American electorate is composed of idiots.” I’d put it this way, a pessimist looks at this and concludes that progressive politicians are inarticulate fools who can’t get even the simplest ideas across to the American electorate.

  8. This is why I would strongly encourage that proposed legislation have the cost per person in the title of the legislation. If people were told how much all this legislation costs them, they would be much less likely to agree to it.

  9. read the article – “…(The Consumer Financial Protection Bureau, for example, last year put in a budget request of around $300 million—less than one-one-hundredth of a percent of total federal spending.)….”


  10. Amerikans know not what they seek. Listening to polished politicians bruting and pimping lied upon lied Amerikans stupidly support policies that will ultimately destroy them. With no regulation corporations would enslave us, have us live in corporate hovels, paid if at all, in corporate currency, usable in corporate stores. Any dissent would be ruthlessly silenced or eliminated. Government is THE ONLY defense against fascism and tyrant ! Let it be strong! Let it support, advance, and protect the people’s best interests! Let it regulate ferociously to hem in and prohibit the time honored abuses and criminal savagery of corporatism and oligarchy run amuck!

    Amerikans are idiots who will pay s grevious
    price for their collective ignorance and apathy.

    Governments MUST STRENUOUSLY regulate industry to prohibit and prevent GREVIOUS ABUSE and CRIMINAL conduct by industry for profit!!!


  11. Political campaigns have been taken over by Public relations “experts”. This is because they “know” everything. They “know” that people want to be told what they already believe and that they will usually reject ideas that run counter to what JK Galbraith called the conventional wisdom. They also “know” that people like good looking people and trust people who dress conservatively, (like bankers).

    The result is always the same: a tall, well dressed, good looking candidate with a vacuous smile, and the ability to speak for ten minutes, while seldom completing a coherent sentence. Like Obama or Santorum. What is “Real Change” anyway, bombing Pakistan instead of Iraq?

    A political campaign run this way is not a political campaign. It is PR campaign. If the difference is not obvious, I have made my point.

    The alternative for left and right is to run the issues. The spokesman or woman for an issue does not need to be tall or good looking and is not disadvantaged by having a brain. What they need is the ability to connect to a person through sharing their life. It sounds complicated, but it isn’t.

    Regulations make a fine issue. Banking regulation is about Mrs Murphy’s home, and a job for young people like Jeram. It is about working together, pooling resources, to build something better for the future. That’s what banks do. Sure, the details can be complicated, but peoples lives are complicated too, and they manage. People need to save more and so they need more security for their money. The Government can help, but mostly people like to manage for themselves.

    Campaigns are easy if you can control your own ego, and dump the PR consultant.

  12. Americans know little about regulations. How could they? Even their “experts” on banks, like Kwak and Johnson, preach about the lack of bank regulations, while blithely ignoring that by means of the capital requirements based on perceived risks never ever have the bank regulators so heavy-handedly intruded in banking.

  13. There isn’t necessarily a contradiction between wanting more regulation and wanting to pay regulators less. They might think that regulatory bodies are really inefficient, or that the tasks that the bodies do aren’t an important part of regulation. They could also think that the problem with regulation is that the rules, which are enforced and followed, are not written (by congress) to prohibit enough. They could also think that regulations are too complicated while being insufficiently strict: “banks are allowed to cheat people, and they have to file a mountain of paperwork (either way), which is a big waste.”

  14. Hedge funds, for instance, can rarely leverage over 10 to 1 as the market will not allow or trust them to do so. The banks leveraged from around 30 to 1 in the USA to around 40 to 1 in Europe because they were regulated, and the regulators allowed such leverages.

    So had there not been any bank regulations there would most certainly have been other type of bank crisis, like those resulting from Madoff type frauds, but there would never ever have been a systemic crisis so large as this one. That should also tell us something… or not?

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